Government promotes EV manufacturing . . .
Last Wednesday, the Indian government revealed a plan to provide C$4.5 billion to electric vehicle (EV) companies over the next five years to encourage the domestic production of EVs. The announcement follows the recent decisions of Ford and General Motors to close their production facilities in India due to low car sales; Ford will reportedly lose C$2.5 billion by withdrawing from India in 2021. In recent years, India has experienced an economic slowdown in part due to the continuing effects of its 2016 demonetization of INR500 and INR1000 banknotes and the COVID-19 pandemic in 2020.
Battling air pollution . . .
On Tuesday, hundreds of Ford workers protested the plant’s closure. Some were confused about why the Indian government hadn’t provided incentives to gas-powered vehicle manufacturing to keep the plants open. It seems that the government hopes to attract new jobs and foreign investment through the manufacturing of EVs instead. Another consideration for the government is the effect of gas-powered vehicles on air pollution. In 2019, India suffered the most deaths due to air pollution in the world, with 1.7 million deaths representing 18 per cent of total deaths in India that year. India’s air pollution has only worsened since then, with yesterday’s announcement by the World Health Organizations that it has tightened its guidelines for air quality for the first time since 2005 being well-timed.
Implications for the global electric vehicle market . . .
India’s entry into the international EV market may affect the current dominant EV manufacturers, including China and the U.S., as India has an immense labour force already skilled in vehicle manufacturing and a largely untapped consumer market. Tesla, which has plans to enter the Indian market, has the largest global market share of electric and hybrid vehicles. But other vehicle manufacturers, such as China-based SGMW, have begun manufacturing smaller and more affordable electric vehicles that have already captured a significant portion of the Chinese EV market. Tesla’s entrance into India may signal the company’s intent to produce more vehicles at lower cost to compete with other brands.