India’s Flirtations with Electric Vehicles

indiaSPHERE
indiaSPHERE

After years of work and experimentation, the first commercially viable electric motorcycle from India has been made available. Made by the start up Ampere, the electric bike is one design that many Indians, especially in the rural areas, have purchased for their daily needs.

The electric motorcycle is not sleek and shiny designed for the urban setting but it is a heavy converted Chinese bicycle that has a top speed of fifteen miles per hour and it is a workhorse when it comes to heavy loads. Named the Angel, its main customer base are farmers and tradespersons and it is lauded for its low cost, about U.S. $386. The motorcycle is able to withstand great stress workload and is powered by free electricity available in the southern countryside of Tamil Nadu.

Unfortunately, a recent power shortage hit the agricultural state forcing the government to ration electricity. This tremendously affected the sales of the bikes, up from 600 a month to just 60 bikes.

This is just a microcosm of the worsening power issues that affect the sub-Continent. Since the electric vehicle market is still in its infancy, the continued power crisis would affect the bottom line for individuals who are worried they would not be able to fully charge their batteries with the rationed power.

In the macro sense, the power crisis is affecting the whole of India and has been pinpointed to the mismanagement of a specific power grid, causing massive blackouts affecting 600 million individuals for two whole days. This though is part of a recurring problem that many Indians have grown accustomed to, nicknaming them as ‘power cuts’.

The shadow of rolling blackouts has affected not just start ups like Ampere, but also established players such as Hero Electric. Hero Electric is one of the biggest producers of two wheeled electric vehicles in the country and their bottom line has been tremendously affected with the flickering of the power grid.

According to the Chief Executive Officer of Hero Electric, “We have discovered that in the last six months our sales have dropped to only fifteen percent of what it was in Tamil Nadu. Because there is nothing in sight, no resolution in the next few months, the sentiment is really subdued and the dealerships are closing one by one.”

It is hoped that the future of electric vehicle revolution bodes well for India. The central government has promised U.S. $4.13 billion stimulus program, with subsidies with the objective of having six (6) million electric vehicles on Indian roads by 2020. A previous program to subsidize electric cars back in 2010 was prematurely stopped when funds dried up and this program now can only be hoped to work.

Increasing Market Share for Hybrids in 2013

hybridcarsign
hybridcarsign

With more and more environmental issues becoming headlines, the integration of that thought in major choices such as purchasing vehicles become more paramount in the marketplace. There are increasing numbers of purchasers opting for green vehicles as their transportation of choice.

This has translated to an increase in demand and number of units purchased in 2013. This comes as a watershed moment as the very first hybrids were introduced in the late 90’s, yet were only given serious thought twenty years later. There are many reasons that lead to the long delayed integration and acceptance of hybrids are the higher costs, technological demands, and many other factors.

This change in paradigm has been observed by the research firm Mintel, as it observes the sales of hybrids, plug-in hybrids and electric cars reached a total of 440,000 units for 2012. This is a jump of 73% from the figures found in 2011. This increase was still quite high, even if there was a slowdown during November 2012. The major automakers are expecting to sell about 50,000 units as a whole for this year.

Aside from this environmental consciousness, other factors fueled the increase in demand. These include the increasing number of options and varieties of alternative fuel cars made available in the market in 2011. Mintel notes that there are nearly four times as many plug-in and electric car models available in 2012 alone. Some carmakers had just three models in 2011 but now have eleven separate models in 2012.

According to Mintel automotive analyst Collin Bird, “New midsize hybrid models, such as the Toyota Prius V and the Chevrolet Malibu Eco, have proven popular with consumers, in particular families, who want to buy green without sacrificing other features that fit their lifestyles.”

Bird added that the demand for alternative fuel cars would just continue on its growth in the near future by saying, “The segment will grow even further in 2013, with the launch of several new models, including the full Ford Fusion Hybrid series and the Honda Accord Hybrid, which will fulfill a wider variety of needs then conventional compact hybrids. Midsize plug-in hybrids will also enter the mainstream in 2013, with the introduction of the Ford Fusion Energi and the Honda Accord Plug-In, which will further improve mainstream acceptance of this, still, fairly novel powertrain segment.”

One of the fastest growing markets is the younger generation that is environmentally conscious as to their carbon footprint. Mintel found that nearly 34% of the purchasers in 2012 were aged between 25 to 34. Many in this age bracket believe that it would be easy to get their returns on the investment in the hybrid car as gas prices continue to rise. The trend is further expected to rise in 2013 and the years to come as innovations and improvements in the technology and design continue for the hybrid market.

EV Demand Making Used Car Sales Take Notice

usedcar
usedcar

As the car market changes, the secondary car markets - such as used car market - is also heeding the changes. The current demand is for low mileage vehicles, even in the second hand market, and used car salesmen are taking notice.

The current car market is in a state of flux. The recent recession has caused major demand shortfalls from Japan and the increasing legislation regarding efficient mileage is exerting pressure on an already volatile market. Negotiations for trade-ins often are done in mere minutes especially when your car is considered a premium used car.

A premium car in today’s market is smaller and more fuel-efficient cars or older model hybrids or electric vehicles. These cars are between two to five years of age.

These cars command prices. In August, the average trade in value for these premium cars was at $10,489 while midsize vehicles sold for $12,529, while midsize luxury cars sell for an average of $25,426. These prices though are not one off purchases by dealers and are often attached to an eventual purchase made by the car owner.

There are many reasons for higher demand for these premium vehicles. These include downsizing, newer technology and safety features or lease expiry.

There is also a clear demand for older or first-generation hybrids or electric vehicles. This comes after newer models come off the showroom, the first hybrid owners now want the newer technologies offered in the latest models. After their purchase they sell off their old alternative fuel vehicles that are then snapped up in the market. Even auto leases have been offered outright purchases of their older hybrid vehicles for a premium price because of the clamor from the secondary market for hybrid or alternative technology vehicles.

Clearly, the electric car revolution is having its trickle down effect. While the greater majority of the car owners may not have the purchasing capacity to buy the latest electric vehicle, the secondary market now provides the opportunity to own one fuel efficient or alternatively fuelled vehicle in your own garage.