Is India Winning or Losing the Electric War?: Business Case Study

Summary

The 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

00:00

🚗 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.

05:01

🌏 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.

10:02

🔋 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.

15:03

🛠️ 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.

20:05

💡 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.

Keywords

💡Electric Vehicle (EV)

An electric vehicle, or EV, is a vehicle that uses electric motors and batteries for propulsion rather than a conventional combustion engine. In the script, EVs are the central theme, representing a technological shift and a key area of focus for various nations and companies in terms of innovation, market growth, and geopolitical strategy.

💡Revolution

The term 'revolution' in the script refers to a significant change or development in a particular field. Specifically, it is used to describe the shift from internal combustion engine vehicles to electric vehicles, indicating a transformative period in the automotive industry.

💡Geopolitics

Geopolitics pertains to the influence of geographic factors on international politics and power relations. In the context of the video, geopolitics is intricately linked with the EV industry, as nations compete for dominance in controlling resources essential for EV production, which is likened to the historical significance of oil.

💡Battery Cell

A battery cell is the basic unit of a battery, consisting of an anode and a cathode, and is capable of storing and releasing electrical energy through chemical reactions. The script discusses the importance of battery cells in EVs, highlighting their role in the value chain and the economic and functional significance in the construction of electric vehicles.

💡Battery Management System (BMS)

A Battery Management System, or BMS, is a critical component in electric vehicles that manages the performance, health, and charging/discharging of the battery to ensure longevity and safety. The script emphasizes the role of BMS as the 'brain' of the battery, underlining its importance in the EV industry.

💡Value Chain

The value chain in the script refers to the sequence of activities a company or industry engages in to create and deliver a product or service. For the EV industry, the value chain includes battery cell manufacturing, EV components, software and telematics, original equipment manufacturing, charging ecosystem, and mobility as a service.

💡Lithium

Lithium is a chemical element that is crucial for the production of batteries used in electric vehicles due to its light weight and high energy capacity. The script discusses the geopolitical aspects of lithium, including its reserves and the dominance of certain countries in its production and processing.

💡Cobalt

Cobalt is another critical material used in the cathode of lithium-ion batteries, enhancing their energy density, longevity, and safety. The script points out that a significant portion of the world's cobalt production comes from the Democratic Republic of the Congo, with China having substantial investments in cobalt mines there.

💡Total Cost of Ownership (TCO)

Total Cost of Ownership is a financial estimate of the total costs related to the purchase and operation of a vehicle over its lifetime. The script uses TCO to compare the economics of EVs versus internal combustion engine vehicles, showing that despite a higher initial purchase cost, EVs can be more cost-effective in the long run.

💡Government Subsidies

Government subsidies in the script refer to financial incentives provided by the government to encourage the adoption of electric vehicles and support the industry's growth. These subsidies aim to reduce the purchase cost for consumers and lower production costs for companies, thereby fostering market viability and technological development in the EV sector.

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]