Gusts of change in automobile industry all set to transform our cities

In 2017, Union minister Nitin Gadkari declared that India will move to 100% electric cars by 2030. “I am going to do this, whether you like it or not. And I am not going to ask you. I will bulldoze it,” he had said this at a time when even the UK and France were hoping to phase out conventional combustion-engine cars only by 2040. His good sense got the better of his hubris eventually and he diluted the plan from 100% down to 30%.

The government can do little. It’s only technology shifts and market transformation on pricing that will bring about a change. If you’ve an IC engine (ICE)-driven car it should be the last one you buy.

The Indian automobile industry is in a ponderous mood. It has had a rough ride and clearly the market for vehicles has peaked. The market and all vehicle owners are staring at the prospect of IC engines getting converted to electric ones in the next ten years – provided the technology and cost aid it. Well, despite the policy being in place, besides a great deal of talk in the media and in industry forums, not much is happening on the ground.

In 2019, 2000 cars and 4000 two-wheelers were sold in India.

China powered its way to a point to own 3,50,000 electric cars, 21 million two-wheelers, and over 1,00,000 electric buses– bigger than the total bus market in India. Trucks and vans too have begun going electric.

Headlines in the media [EV frenzy is set to bulldoze India’s auto industry; auto parts makers’ days are numbered] show barely concealed excitement at the prospect of sweeping changes that are on the cards though no one has a clue on how it would happen by 2030.

Also read | No immediate measures to boost demand: Auto industry on Budget 20200

So how is the scenario emerging? The automobile industry is at a very major defining moment, a ‘species moment’ across the world, not just India.

As you step out on the streets today, what you see doesn’t suggest at all that such a change is but a few years away from now. Electric cars have a limited range and right now there isn’t even the semblance of an ecosystem for putting in place charging stations across the country.

If you have to understand the landscape for city transportation in India, it will have to be through the glass of both energy and sweeping technology disruptions in the automobile industry which is clearly market-led. Energy and transportation, the way we know it, will be obsolete by the end of this decade. New products and services will create disruptions on a scale uncommon in the last century.

But how has the point of inflection emerged? Cars replaced horses between 1900 and 1915. In the 1980s the digital and phone revolutions took place. In just 15 years that  changed the way we lived and worked.

Key technologies that will disrupt in the 2020s are AI, IOT, precision biology, robotics, solar PV, 3D printing and visualisation, cloud computing, big data, block chain and drones…. many of them have started to converge dramatically to transform transportation and mobility across all cities of the world. India is no exception.

Like in the last 30 years, with 15-year cycles, consumer tastes and preferences are again up for a major change as the millennial and GenZ shape demand while technology shapes markets. Cars will be rented, not owned. Electric cars will be designed to drive up to 5-8 lakh km. Remember, IC engines have always been designed for only a third of that distance. Therefore, the targeted market aimed is that of Ola’s, Didi’s, Lyft’s and Uber’s of the world which will bring down consumer costs by 90 per cent leading to the individual buyer market becoming a minority segment. In just the last seven years, cabs stormed the world’s cities and destroyed traditional services.

2020 is a turning point. Car sales have already plummeted in America, India, China and Europe. This market trauma is paving the way for a revolution in electric or solar cars, in batteries, autonomous vehicles and on-demand cars. When you converge these devlopments they’ll wipe out, by 2030, conventional energy and transportation scenarios of the past 100 years.

The last five years has already seen a 90 per cent drop in solar PV and lithium ion battery costs. EVs are 10x cheaper already than IC engines on fuel and and O&M costs. An EV has 20 plus moving parts to about 2000 plus parts of an IC engine. They offer infinite mile warranty and near zero maintenance. It’s not without reason Google has confirmed an order for 1,00,000 electric vehicles for delivery in the US in 2021.

Already, a 300 km (range per charge) EV without subsidy is available at about USD 30,000 worldwide, what we in India would call the luxury segment. Options at USD 10,000 are already on the road in India though in very small numbers. The Indian auto industry is waiting, biding time, for the market to make the shift. 2019 saw a peaking of the market. The shift by every well-researched market extrapolation is clear. By 2025-26 ICE-powered vehicles will have crashed by 80 per cent with a dramatic drop in diesel or petrol demand.

So what happens to the oil industry which is so wholly dependent on consumption by these ICE-based cars? Clearly projections show that demand for oil in any form will peak by 2021-22 at about 100 million barrels a day. but will go downhill by about 70 per cent by 2030. The other amazing thing that is forecast, is a crash in oil prices to about USD 25-20, even 15 dollars a barrel by 2022. This is hard to see, like the rest of these ‘predictions’, when the barrel price is close to USD 60 today. But this is a near certainty by every prognosis. So deep-water oil and shale will disappear, soon enough, just as typewriters and the old wired telephone did some years ago.

Also read | Gadkari concedes decline in automobile sector, vows to revive industry

By 2030, autonomous vehicles will be ten times cheaper than regular cars and four times cheaper than operating costs of any regular ICE-driven car you own. By 2030, in most parts of the world — surely the US and Europe — 90 percent of car miles will be electric, autonomous and on-demand. Not because of governments but for purely economic reasons. No one eventually will buy a car — IC or EV — except for fleets. The market logic and the generational shift in consumer preference offers a powerfully compelling market logic.

The other pleasant upshot is that the way the world master plans its cities will need a major rethink in a few years from now.

Fleet companies will have to invest in a number of charging stations — and in the right locations — to handle more than a million electric cars. India has 60,000 gas stations with about 25,000 run by IOC alone. Demand for these will drop dramatically and fleets will create their own power bays with less of the challenges of retailing fuel. Fleets across India — with the numbers of these companies and the EVs growing rapidly — have to perhaps look at collaborations with the NTPC for access to charging stations or go local with solar grids of their own with grid dependence only for wheel and bank.

Ninety five percent of the time an owner car is parked. With personalised transport replaced by a service, a chunk of urban spaces used for parking will be released across cities, initially in the first world and then in the third.

A chunky 30 percent of a city’s geographic spread will become available for real estate and construction. It’s time for us to think about what we want to do with these spaces. Do we want more commercial buildings or housing with private ownership? Or do we want parks and public spaces? Cities have to think about reshaping their land use—an opportunity we have not had forever, to rebuild our cities.

Not owning a car and subscribing for one when you need will release tremendous amounts of money for personal investments. An added bonus is the quantum of time released by not driving. We are already seeing ads from fleet owners enticing people to take to subscribed cars and work through the traffic hours or read or listen to music or catnap. With such disruption in cost where less than a dollar a kilometre is all you pay, it will lead to transportation for all who want to commute by road—the poor, the old, the young, and the retired. All will have access to personalised transportation. And the combination with metros that every city is creating will make owned cars a thing of the past.

This decade will see cities building resilience to air quality. And so between cars and MRTs/ELS/Tubes, mobility will turn cheap, sustainable and technologically clean. All this also means a 90 per cent drop in greenhouse emissions. It will clean up the power generation side. And with subscription-based cars doing a 1,00,000 km inside a city a year against the typical owned-car’s 10,000 km, parking spaces will free up.

Another interesting fallout is on the power supply front with convergence of solar rooftops that enhance local generation, a generational shift in battery technology and costs, and smart IOT based infrastructure. Solar, as we know, is not just cheaper than the grid supply, but it’s cheaper than even transmission!

We are at a point where it is in everybody’s selfish best economic interest to move from personal transportation to a service. Some day soon, our cars will have enough energy in them drawn to power our homes too, even if that is some years from now. Cities, energy and transport are going to be radically different in the on-going decade of the thirties.

What is set to happen to the mobility markets is not conjecture. It is based on research. This is not an energy transition. This is a market-led disruption. It won’t happen because of governments but despite them. So any time spent persuading governments on sustainable mobility will be a waste of effort, time and money. Environment and sustainability advocates should look forward to pursuing other causes. Mobility and city transportation does not need their effort.

(The writer is a pioneer in green buildings and a Senior Fellow of the Indian Green Building Council)