Is India Winning or Losing the Electric War?: Business Case Study
Summary
TLDRThe script delves into the electric vehicle (EV) revolution, highlighting its rapid pace driven by corporations and government policies. It underscores the significance of EVs in shaping 21st-century geopolitics, with a focus on resource control. The narrative explores the value chain of the EV industry, emphasizing the importance of battery technology and the strategic materials within. It reveals China's dominance in the lithium and cobalt supply chain, crucial for EV batteries. The script also discusses India's position, challenges, and opportunities within this revolution, including government subsidies aimed at fostering a sustainable EV market. The episode concludes by identifying 'cold start' problems in India's EV adoption and the potential for entrepreneurial solutions.
Takeaways
- 🚗 The electric vehicle (EV) revolution is accelerating with major corporations and car manufacturers transitioning from combustion engines to electric ones.
- 🌏 Geopolitical factors are crucial in the EV industry, as control over the resources to build EVs and solar panels could dictate global power dynamics in the 21st century.
- 📈 EV sales are rising in the US, with EVs accounting for at least 10% of all new passenger car sales, indicating a significant shift in the automotive market.
- 🇨🇳 China's rapid growth in the EV sector is influencing global industry trends, prompting foreign automakers, including American brands, to pay attention to Chinese competitors.
- 🔋 Batteries are the core component of EVs, making up 35-50% of the cost and being central to the vehicle's performance and efficiency.
- ⚙️ The battery cell, battery pack, and battery management system (BMS) are key elements in the EV value chain, with significant profit margins for businesses.
- 🌱 Lithium and cobalt are essential materials for EV batteries, and their supply is concentrated in a few countries, with China dominating the processing and manufacturing.
- 💡 India's EV market is expected to grow exponentially, with major companies like Ola Electric and Tata pushing boundaries to capture the market.
- 💰 The Indian government is promoting the EV industry through subsidies and policies to make EVs more affordable and drive adoption.
- 🚧 There are 'cold start' challenges in India, including the need for more EV brands, improved component manufacturing, better charging infrastructure, and financing options.
Q & A
What is the main focus of the podcast episode discussed in the transcript?
-The podcast episode focuses on the electric vehicle (EV) revolution, its impact on geopolitics and the global economy, and the role of different countries, particularly the US, China, and India, in this emerging industry.
Why are corporations and car manufacturers moving towards electric vehicles?
-Corporations and car manufacturers are moving towards electric vehicles due to increasing concerns about climate change, depleting fossil fuels, and the push from governments like the Biden Administration for a transition to electric vehicles.
What does the Biden Administration aim to achieve with their push for electric vehicles?
-The Biden Administration aims to encourage Americans to transition to electric vehicles as part of a broader effort to combat climate change and reduce carbon emissions.
How significant is the electric vehicle market in terms of new passenger car sales in the US?
-Electric vehicles represent at least 10% of all new passenger car sales in the US, indicating a growing market and consumer interest in EVs.
What is the connection between electric vehicles and geopolitical power in the 21st century?
-In the 21st century, control over the resources needed to build electric vehicles or solar panels is seen as a key to global power, similar to how oil determined the power of nations in the 20th century.
Why is the growth of China's electric vehicle industry referred to as a 'Chinese storm' in the global industry?
-The term 'Chinese storm' refers to the rapid and significant growth of China's electric vehicle industry, which has caught the attention of foreign automakers, including American brands, and has positioned China as a major player in the global EV market.
What is the role of the 'one person club' mentioned in the transcript?
-The 'one person club' is a company founded by Sharon Hegde, also known as Finance with Sharon. Its vision is to help individuals achieve financial independence and educate them on financial management, early retirement planning, tax planning, and insurance planning.
What are the three main reasons for the shift from internal combustion engines (ICE) to electric vehicles (EVs)?
-The three main reasons for the shift are: 1) Climate change and the need to reduce carbon emissions, 2) The rapid depletion of fossil fuels, and 3) The vulnerability of the Indian economy to oil price fluctuations.
How does the government of India plan to boost the electric vehicle industry?
-The government of India plans to boost the electric vehicle industry through subsidies, tax breaks, and other incentives to both consumers and companies to decrease the cost of production and encourage mass adoption of EVs.
What are the 'cold start problems' of India's EV revolution as mentioned in the transcript?
-The 'cold start problems' refer to the initial challenges that need to be addressed for the successful adoption of EVs in India, which include a lack of enough brands in the EV sector, the state of components manufacturing in India, the state of charging infrastructure, and the high initial cost of purchase leading to a demand for financing options.
How does the cost of ownership for electric vehicles compare to that of internal combustion engine vehicles over their lifetime?
-The total cost of ownership (TCO) for electric vehicles is more economical compared to internal combustion engine vehicles over their lifetime, despite a higher initial purchase cost. This is due to lower operating costs, such as charging versus fueling, and maintenance expenses.
Outlines
🚗 The Electric Vehicle Revolution and Its Geopolitical Impact
The script introduces the rapid growth of the electric vehicle (EV) industry, highlighting the shift from combustion engines to electric power. It discusses the Biden Administration's push for EV adoption in the US, with EVs now accounting for at least 10% of new car sales. The narrative suggests that control over EV and solar panel resources may determine global power in the 21st century, drawing parallels with the oil industry's influence in the 20th century. Major corporations like Tesla, Ford, and Volkswagen are investing heavily in the EV market, while geopolitical tensions exist between China and the US over critical materials needed for EV production. The script also points out the significant growth potential of the Indian EV market, with companies like Ola Electric and Hero stepping up to capture market share. The episode promises an in-depth look at the EV industry, including investment opportunities and the macro view of the electric revolution.
🌏 Geopolitical Dynamics in the Electric Vehicle (EV) Industry
This paragraph delves into the geopolitical battle for dominance in the EV market, focusing on the critical role of lithium and cobalt in battery production. It explains the importance of these elements in EV batteries and how China has positioned itself as a major player by controlling a significant portion of the lithium supply chain. The paragraph also discusses the concentration of lithium production in a few countries, with Australia, Chile, China, and Argentina leading the way. It points out that despite being a major producer, Australia exports most of its lithium to China, which in turn dominates lithium processing and battery manufacturing. The script also introduces the concept of the EV value chain, which includes battery cell manufacturing, EV components, software and telematics, original equipment manufacturers, charging ecosystem, and mobility as a service. Each segment's potential for business and profitability is highlighted.
🔋 The Importance of Lithium and Cobalt in EV Battery Production
The script emphasizes the significance of lithium and cobalt in the construction of EV batteries, detailing the composition of the cathode and the unique properties of these elements that make them indispensable for modern batteries. It reveals that China has a stronghold over the lithium value chain, from mining to processing and recycling. The paragraph also discusses the distribution of lithium reserves, with Australia being the largest producer but lacking refining capabilities, leading to a reliance on China for lithium processing. Furthermore, it uncovers China's strategic investments in lithium projects across the world, reinforcing its dominance in the industry. The script also raises the question of recycling and the potential for other countries to leverage this aspect of the supply chain, only to reveal that China also leads in lithium battery recycling.
🛠️ India's Position and Challenges in the EV Revolution
This section examines India's stance and challenges within the EV revolution, acknowledging the country's lack of lithium reserves and its dependency on imports, predominantly from China. It outlines the government's efforts to promote EV adoption through subsidies and the viability cycle of EVs in India. The script discusses the government's role as the 'Godfather' of the market, using subsidies to stimulate demand and production, thereby reducing costs and fostering a self-sustaining market. The total cost of ownership (TCO) for EVs and internal combustion engine vehicles is compared, demonstrating the long-term economic benefits of EVs despite their higher initial costs. The paragraph concludes by identifying the 'cold start' problems that India needs to address to fully embrace the EV revolution, including the need for more EV brands, improved component manufacturing, better charging infrastructure, and accessible financing options.
💡 Opportunities and the Future of EVs in India
The final paragraph summarizes the potential opportunities and the future outlook for EVs in India. It acknowledges the initial challenges but highlights the government's strategic interventions to create a conducive market for EVs. The script points out that as the cost of EVs decreases and becomes more affordable, the government can phase out subsidies and allow the market to sustain itself. It also underscores the importance of addressing the 'cold start' problems for India to successfully transition to EVs and capitalize on the economic opportunities presented by the industry. The paragraph concludes by encouraging viewers to learn from the case study and consider the vast potential within the EV sector for investment and business ventures.
Mindmap
Keywords
💡Electric Vehicle (EV)
💡Revolution
💡Geopolitics
💡Battery Cell
💡Battery Management System (BMS)
💡Value Chain
💡Lithium
💡Cobalt
💡Total Cost of Ownership (TCO)
💡Government Subsidies
Highlights
Electric vehicle (EV) revolution is accelerating with big corporations and car manufacturers transitioning to electric.
The Biden Administration is promoting the shift to electric vehicles in the US.
EV sales are increasing, with EVs comprising at least 10% of new passenger car sales in the US.
Control over resources for building EVs and solar panels could determine global power in the 21st century.
Tesla, Ford, and Volkswagen are investing heavily in the EV market.
China and the US are in a geopolitical battle for essential EV materials.
India's EV market is expected to grow at a CAGR of 90% this decade.
Indian companies like Ola Electric and Tata are pushing into the EV industry.
The EV revolution presents investment and business opportunities.
The One Person Club aims to help achieve financial independence.
Three reasons for the shift to EVs include climate change, fossil fuel depletion, and economic vulnerability to oil prices.
A successful revolution depends on customer disability, market viability, and technological feasibility.
The EV industry's value chain includes battery cell manufacturing, EV components, software, and charging infrastructure.
Batteries are the central product of the EV industry, making up 35-50% of an EV's cost.
China dominates the lithium and cobalt supply chain, crucial for EV batteries.
India has potential lithium reserves but lacks the capacity to process them, leading to reliance on imports.
The Indian government's subsidies and policies aim to boost the EV industry and make it economically viable.
Total cost of ownership for EVs is more economical than IC engine vehicles over their lifetime.
India faces 'cold start' problems in the EV sector, including lack of brands, component manufacturing, charging infrastructure, and financing options.
Transcripts
hi everybody two weeks back I had gone
to assist nikil K with his research on
his podcast on the electric vehicle
Revolution and because of that we ended
up reading 500 pages of research and we
found something absolutely fascinating
the electric Revolution is gathering
Pace with each passing dat big
corporations and car manufacturers are
going electric and ditching the
combustion engine the Biden
Administration is pushing Americans to
transition to electrical Vehicles we
think they are coming in a way this is a
technology of the future electric car
sales are on the rise in the US Tesla is
coming out with an all new electric
vehicle EVS represented at least 10% of
all new passenger car sales and while
most people might think this to be yet
another business Trend what they don't
realize is that just like oil determined
the power of nations in the 20th century
in the 21st century whoever controls the
resources to build an electric vehicle
or solar panel will go on to control the
world itself
and just like oil this is one such
industry where both business and
geopolitics come hand in hand so while
on one side Tesla Ford and Volkswagen
are pouring in billions of dollars to
crack the EV Market on the other side
China and the United States are in a
geopolitical war to dominate the most
essential materials to build an electric
vehicle China's growth in EVS is what
some experts call a Chinese storm in the
global industry foreign automakers
including American brands are now paying
attention to Chinese players like BD the
US has to become more competitive to
grab a bigger electric vehicle market
share India's electric vehicle Market is
expected to grow at a compounded annual
growth rate of 90% this decade similarly
in India we are seeing giant companies
like Ola electric a energy TVs Tas and
even hero pushing their boundaries to
capture the EV industry of India and
lastly just like any other business
Revolution even the eveve revolution has
some wonderful opportunities to invest
and build build a business in so in this
in-depth episode of 30 minutes we are
going to take you into a deep dive and
give you a snapshot of the entire EV
industry and this is the only 30-minute
explainer that you would require to
understand the macro view of the
electric Revolution so let's dive into
the case study and understand why are us
China and India so crazy about EVS where
does the power game of electric vehicles
actually lie how will eeve determine the
next superpowers of the 21st century
where does India stand in this race how
are legends like Amani and tatas
catapulting India into the Eevee
Revolution how is the economics of Eevee
changing with each passing year and most
importantly as entrepreneurs and
students of business where do the Golden
opportunities of electric Revolution
lie this video is brought to you by the
one person club which is founded by my
dear friend Sharon hegre and you might
know him as Finance with Sharon While
most people only know Sharon as a
content creator I know Sharon as the
super hardworking person who has been
working relentlessly to spread Financial
education in India and with this Vision
he started his company called the one
person club which now has nikil Kut as
an investor the vision of one person
Club is to help you Achieve Financial
Independence which is the superpower to
never work for money again you see the
Indian education system only focuses on
helping you get a high paying job but
what good is that high-paying job if you
don't know how to manage and use that
money to grow your wealth in fact many
famous people like amitab ban and
Michael Jackson have almost gone broke
after earning hundreds of crores this is
how dangerous Financial mismanagement is
so if you don't want to make the mistake
of neglecting your finances right from
your 20s if you're serious about taking
control of your hard-earned money and
most importantly if you want to learn
about early retirement planning tax
planning and insurance planning use the
link in the description to join the one
person club and become a part of this
wonderful Finance community and now on
to the
episode Cho let's start from the basics
and first try to understand why are we
suddenly moving to eeve from IC engines
and there are three straightforward
reasons for this the first reason is
climate change because our carbon
emissions are at their Peak so much so
that emissions during World War II look
healthy as compared to the emissions
today so the ice caps are melting
temperatures are going to extreme levels
and it's causing a Havoc all across the
world there is a troubling indicator of
about global warming preliminary data
shows the Earth has breached a critical
temperature threshold for the first time
in recorded history emissions continue
to rise with those Rising emissions heat
is going up too the massive ice sheets
at the top and bottom of our planet are
shrinking much faster than previously
thought secondly fossil fuels are
depleting so fast that at the current
rate we have less than 100 Years of fuel
left we might be running out of our main
energy source it is speculated that the
oil and gas reserves we have right now
will barely last us another half a
century before we run out and lastly we
have the vulnerability of Indian economy
to oil prices now I don't have to tell
you much about it because you already
saw how the Russia Ukraine War caused
the oil price to hike and how it
affected the Indian economy so these are
the reasons why India and every other
country have said their are zero
emission targets and these targets lie
between 2050 to 2070 Global oil prices
have touched
$116 per barrel mark this is the highest
in the8 years now if you look at when
does a revolution actually become
successful you will see that it is a
combination of three variables customer
disability Market viability and
technological feasibility and when a
product or service Falls at the cusp of
these variables it results into a
successful product and ends up bringing
a revolution so let's dig deep into the
EV Revolution and see how these
variables actually come together and you
will understand where this Revolution
Will Peak better now if you look at this
chart you will see the entire value
chain of the EV industry along with
their ABA Marin and this chart says that
there are six emerging value chain
entities on which you could build your
business in the EV industry the first
segment is the battery cell
manufacturing and packaging and BMS each
of them have an Abita margin of 15 to
20% and 20% each for those who don't
know battery cell is the basic unit of a
battery which consists of an anode and a
cathode so the battery cell is the
smallest unit in a battery system that
can store and release electrical energy
through chemical reactions whereas if
you at a battery pack a battery pack is
an assembly of multiple battery cells so
these cells are connected in a pack to
increase the voltage and the capacity of
the battery so these battery packs are
the energy storage system of an Eevee
and lastly a BMS or battery management
system is like the brain of the battery
so the BMS manages the performance
health and the charging and discharging
of the battery to make it last longer
and BMS is super important because it
safeguards the battery from overcharging
overheating and other factors that could
impact the safety of the battery
basically BMS is like the CPU of
batteries if this is very very clear to
you let's come to the second segment
which is the segment of EV components
here there are businesses that
specialize in manufacturing various
parts that make up an electric vehicle
and this includes everything from Motors
to inverters which contribute to the
overall performance and efficiency of
the EV then we have the third segment
which are software and telematics which
again have an ABA margin of 15 to 20% so
just like your phone has a sophisticated
software even EVS are run by software
and electronic control units to manage
the battery management motor control and
user interface this software is crucial
for the efficient and safe operation of
vehicles and this means as we move
towards EV and as more and more cars get
connected to the internet we would see a
huge surge in incar applications and
here's where again you have a massive
opportunity then you have the new age
oems or original equipment manufacturers
and here's where you have an AIT of 8 to
10% and you have companies like ather
energy which produce design engineer and
assemble EVs and then the fifth segment
is for the charging ecosystem which
again has an ABA margin of 8 to 10% and
lastly you have companies in the
mobility as a service segment which
includes companies like Zip electric
blue smart and ULU this is what the
ecosystem of EV looks like and their
Abit margins look like if this is very
very clear to you let's dig deeper now
if you look at the hero product in this
entire value chain was what's your
answer what is that one product that
this entire value chain revolves
around well if you haven't guessed it
already it is the battery of the EVS so
just like the entire IC vehicle industry
is dependent on the supply chain of
crude oil the EV industry is dependent
on batteries the transition from fossil
fuels to sustainable electric power has
gone mainstream most visibly in the Auto
industry those cars and trucks run on
lithium batteries now if you look at the
cost Factor batteries make up up 35 to
50% of the cost of EVS so they're not
just functionally important but they're
also economically important and you know
what guys this is where you'll find
something absolutely shocking because
here's where the geopolitics comes into
play so the question is what is so
special inside these godamn batteries
and how does geopolitics come into this
matter well if you crack open the
battery cell of an Eevee you'll realize
that there is an anode there is a
cathode and both of them are separated
by an electrolyte and all of this is
covered by the body of the the battery
and if you go even further and break
down cathode and see what exactly it is
made of you will see that it's typically
made up of four important components
which are lithium Cobalt manganese and
nickel and cathode alone makes up 51% of
the total cost of the battery so it's by
far the most expensive component in the
battery and then we have the anode which
is usually made from graphite and makes
up 12% of the total cost electroly makes
up 4% and separator makes up 7% of the
total battery cost so let's dive into
the hero product of the battery now
which is the cathode because this is
where the drama lies so what are the
four elements that make up the cathode
it's lithium Cobalt manganese and nickel
and amongst these four elements lithium
and Cobalt are the most important
elements of all but if you look at where
these materials are found you will see
the secret to the next geopolitical
battle the global electric vehicle
Market is heating up and China wants to
dominate we building the future of the
electric vehicle the US is expected to
add 1 million new EVS to its roads in
2023 the electric car Fleet is growing
rapidly and the necessary infrastructure
is expanding in Russia's Moscow if you
look at this graph you will see that 96%
I repeat 96% of the entire world's
lithium comes from only four countries
which are Australia Chile China and
Argentina Chile's lithium industry has
taken Center Stage Chile has the world's
largest reserves of lithium China has
become the world's largest lithium
processor controlling 55% of the market
where really really lucky in Australia
we have the most amazing natural
endowment of all of these battery
minerals in fact when it comes to world
rankings we're in the top 10 for all of
them so just like oil mines Define the
richest and the most powerful countries
in the Middle East today these lithium
mines are like the oil mines of the
1940s so does it mean that Australia and
Argentina will go on to become super
rich and super powerful countries well
not really because here's where I found
something absolutely mindboggling in
this chart in this chart you would see
that even though Australia is the
biggest lithium producing country in the
world they for some strange reason did
not sell this lithium to the world
directly what they did instead was
export this lithium to China and they
shipped more than 90% of their lithium
exports only to China so Australia is
not selling lithium to the world it is
actually China now isn't this stupid
it's like saying Saudi Arabia is selling
oil to the US and the US is selling oil
to the world right well this is where I
started digging even deeper and that's
when I found a another chart this chart
explains how exactly is lithium
extracted and then sold in the market
and as it turns out lithium cannot be
sold directly and it has to be first
processed and then be sold and then it
needs to be recycled to be sold again
and if you look at how China dominates
each one of these value chain segments
you will be shocked look at this map
four countries that have maximum lithium
reserves are Australia Chile Argentina
and Bolivia and in 2013 China acquired a
51% stake in the world's biggest Hard
Rock lithium mine in Western Australia
and a Chinese company is the second
largest shareholder in a Chilean mining
company called sqm and China's gaffing
lithium Co controls 51% of an
Argentinian lithium project and they
also have heavily invested in Bolivian
lithium reserves so who controls the
supply of lithium it is China Bolivia
which is home to huge reserves of
lithium has chosen a Consortium
involving a Chinese battery firm to
develop plants for extracting and also
processing the metal deposits that are
worth over $1 trillion eying these
reserves now is China Argentina is home
to huge reserves of lithium used in
electric batteries Chile has one of the
world's three largest reserves of
lithium and is second only to Australia
in terms of total production Australia
is the biggest producer of lithium in
the world then we come to the refining
capabilities and as it turns out
Australia does not have refining
capabilities at all because all these
processes require very huge Capital
infrastructure and high-tech machines to
actually master and China controls 60%
of the global lithium refining
capabilities similarly as of 2022 China
also produced 75% of all lithium and
batteries in the world this is because
they have these megafactories that
manufacture these lithium batteries at
scale and today out of 200 lithium and
batteries 148 of these megafactories are
present only in China whereas if you
look at Europe and North America they
barely have 21 and 11 megafactories each
and India has zero so who's controlling
the production of lithium it is again
China and here's where one of my team
members asked me a very interesting
question he said bro China is producing
lithium that's great now because we can
just buy it once and keep on recycling
it because lithium is not like oil where
after using it the product will get
extinguished right so why don't we just
let China take all the burden of
establishing the supply chain and we can
just focus on recycling makes sense
right but but guess what again more than
66% of the current recycling capacity in
the world only lies with China so long
story short China clearly dominates the
lithium and eveve battery value chain
from top to bottom now the question is
China is controlling the lithium value
chain that is fine but what if we could
take control of cobalt because China
does not have a lot of cobalt reserves
so what if we strangle China using
Cobalt well this is where even I started
studying Cobalt and again I found
something absolutely astounding Ing and
disturbing at the same time you see
Cobalt is the second most important
element for an Eevee and if you look at
this chart more than 72% of the entire
world's Cobalt is produced by a country
called Dr Congo and even the next 10
countries combined do not produce Cobalt
to match Dr Congo but you know what guys
you will be shocked to know that China's
already so heavily invested into the
most valuable cobal mines in Dr Congo
that out of the total 19 Cobalt
operations China either owns or co-owns
15 of these operations which is why if
you look at who does Dr Congo sell this
Cobalt to it is again China now the
interesting question over here is why
only lithium and Cobalt why the hell
can't we just use some other material to
build these EES well this is because
lithium and Cobalt have some magical
properties when it comes to lithium
lithium has three magical properties
firstly if you have ever looked at the
periodic table after hydrogen and helium
lithium is the lightest metal of all in
fact it's the lightest metal which is
available in solid state because helium
and hydrogen are usually in gaseous
State secondly it has an energy
efficiency of 95% and lastly lithium can
hold a lot of energy as compared to its
weight so while a typical lead acid
battery stores 30 to 50 wats of energy
per kilogram a lithium ion battery
stores 150 to 250 WS per kilogram so a
lithium battery can hold 3 to 8 times
more energy as compared to a lead acid
battery of the same weight and just like
lithium even Cobalt has three magical
properties first ly it is a compliment
material to lithium because Cobalt
enhances the energy density of lithium
and batteries secondly it improves the
longevity and stability of these
batteries so batteries with Cobalt can
often be charged discharged 1 to 2,000
times before their capacity actually
starts degrading and lastly Cobalt
enhances the safety of these batteries
so it prevents these batteries from
Catching Fire so long story short Cobalt
and lithium are irreplaceable and China
controls the access to both these
resources if this is very very clear
Tobe let's dive into the most important
question of the episode which is the
India
[Music]
story GST is only 5% on the electric
vehicle as compared petring vehicle it
is coming to 48% so the question is
where do we stand in this EV Revolution
and with China having so much Leverage
can companies like Tata Reliance Ola
electric and Aon energy actually make a
difference and where exactly is the EV
revolution of India heading well firstly
we don't have a choice guys we have to
go electric because we need to meet our
emission targets otherwise if you
remember from our geopolitical episodes
there could be carbon tax applied on our
products which will make our products
costly in the global markets so the
question is do we have lithium reserves
no we have potential reserves but we do
not have proven reserves yet and even if
we find lithium we do not have the the
capacity to process them this is the
reason why India is importing 100% of
its lithium products worth 170 cror and
8,800 cror worth of lithium and
batteries from other countries with 70%
of a lithium battery dependence only on
China which is risky but when it comes
to other parts of the value chain there
are a lot of companies in India which
are trying to capitalize on the entire
AV value chain and I'll attach a list of
all these companies in the description
along with their segments so that you
can develop a better understanding of
the sector and the companies involved in
that particular particular segment and
this brings us to the heart of the
electric revolution of India which is
the electric vehicle market so the
question is where do we stand in terms
of the feasibility of EVS people for
this you need to understand the
viability cycle of EES in India if you
look at this diagram you will see that
when EVS were started to be made in
India there was very less demand for EVS
this is the reason why electric vehicle
companies could not achieve economies of
scale plus the cost of batteries was
also very high during that time this is
the reason why very few people could
afford EVS which led to less demand and
hence EVS were very costly in India so
this is the Vicious Cycle of Market
viability where it becomes impossible to
drive adoption but this is where the
Godfather of the market comes in now who
is the Godfather in the market it is
none other than the government of India
this is where the government comes out
with subsidies to turn this viability
cycle into a virtuous cycle from a
vicious cycle and this is where we have
subsidies like Fame 1 and fame two which
not just subsidize the consumers but
also subsidize the companies so that
they can decrease the cost of their
production so what do the government do
the government comes and says listen
guys we will decrease the cost of EVS by
giving people subsidies on the purchase
of the EVS at the same time we will not
tax the EV companies and give them
discount on land cost and import duties
this way the companies will be able to
decrease the cost of their vehicles and
on top of this cost drop customers will
further get a discount with these
subsidies eventually the cost of EVS
will decrease and this is where the
cycle changes when the cost of EV
decreases there is more demand for EVS
due to due to high demand for EVS
companies are able to mass produce
Vehicles which decreases their cost
further and this results into more cost
drop resulting into more demand leading
to more cost efficiency so with time if
you look at this graph the cost of
batteries has also decreased so suddenly
the same vicious cycle turns into a
virtuous cycle due to government
subsidies and the research and
development that goes into decreasing
the cost of components and when the cost
drops enough to make EVS affordable the
government withdraws these subsidies in
phases so that free market can sustain
itself and then the government can
collect taxes this is how the Godfather
can create a market and boost the growth
of an industry and if you look at the
result of these subsidies it has been
absolutely magical this is where you
need to understand something called the
total cost of ownership or TCO of EVs
and IC engine Vehicles total cost of
ownership is nothing but the total cost
of owning and operating a vehicle over
its lifetime so it combines everything
from Purchase cost to fueling and
charging to maintenance to even
insurance and finance financing now if
you look at this graph you will see that
the highest cost variable for an EV is
the purchase cost whereas the highest
cost variable for IC engines is actually
fuel cost so if you see this chart in
the TCO of EV two wheelers the cost of
purchase is 1.51 lakh rupees whereas the
charging cost is just 13,420 R but for
IC engine Vehicles while the cost of
purchase is only 64,000 the cost of fuel
over time comes to
138,000 rup so do you see if you just
combine the cost of fuel and the
purchase cost of the vehicle EVS are
actually way more economical as compared
to IC engines it's just that the initial
cost of purchase is very high and if you
look at this chart this is not just the
case with two wheelers but even with
three-wheelers and even trucks while an
IC model of Honda Activa has a total
cost of ownership of 2.32 lakh rupees
with subsidy an aor 450x would cost only
1.87 lakhs and even without subsidy it
would only cost 2.35 lakh rupees which
is just 3,000 rupes more than the Honda
Activa and if you go down the chart it's
even more astounding for a three-wheeler
cargo vehicle while a baj Maxima's total
cost of ownership is 10.66 lakhs and
uler high load EV cost only 6.33 lakhs
with subsidy and just 8.07 lakhs without
subsidy and lastly the most amazing
comparison is this comparison between
Tata is gold and Tata ACV because as you
all know Tata a is super important for
the small business owners of India and
here as you can see the TCU difference
between them is 15 lakh rupes with
subsidy and 12 lakh rupees even without
subsidy and this is absolutely
game-changing this is how the government
uses subsidies to legitimize an industry
in the market so now the question is if
the cost of eveve goes down does it mean
that EVS will very easily be adopted in
the Indian market well even I thought so
but as it turns out while I was reading
this report by Blue menes this report
says that there are four cold start
problems in India which need to be
solved by entrepreneurs like you and me
and this is where you have a massive
opportunity to either invest or start a
business so let's dive into the last
segment of the episode which is called
the coal start problem of India the
first coal start problem is the lack of
enough brands in the EV sector which to
a large extent is being solved by all
the companies that are there in this
chart this basically says that we need
more AV brands in the market the second
coar problem is the state of components
in India which is being soled by
government policies and subsidies and if
you want to get into component
manufacturing I I will attach the pl
details in the description the third
calstar problem is the state of charging
in India where we need an aggregator
platform to plot all these charges and
make it accessible to Indian customers
and we would need a lot of public
charging stations and lastly like we saw
in the TCO chart since the cost of
purchase of EV is too high there is and
will be a very high demand for financing
options from nbfcs like Bajaj Finance or
Banks like idfc First Bank this is the
story of the EV revolution of India so
we learned about the value chain the the
margins the superpowers the geopolitics
the India story and the cold start
problems of India with respect to the
eveve industry and I just hope you
understood and learned something
valuable from this case study that's all
from my S for today guys if you learn
something valuable please make sure to
the like button in autom make Beauty
Baba happy and for more such insightful
business and political case studies
please subscribe to our Channel thank
you so much for watching I will see you
in the next one
[Music]
bye-bye
[Music]
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