Plugged In: An EV Newsletter Vol. 2, No. 2. – Oil, Gas & Electricity

Editor’s Note

Dear Readers,

Our collaboration with guest authors continues to ramp up, this
time with an author from half way around the world! Welcome to yet
another enthralling edition of Plugged-In, where we hear
from Rajendra Bhinge, ex-chief executive officer of Tata Strategic
Management Group, ex-executive director of Tata Industries, and
currently the Chairman of Antennae Ventures Pvt. Ltd., an
accelerator of innovative, tech-driven startups. Based in the city
of Mumbai in India, Mr. Bhinge recently co-sponsored the set-up of
an EV powertrain lab at his alma mater, IIT-Mumbai, which envisions
transforming research and innovations in the EV space at the
renowned institution. Mr. Bhinge is a fervent EV enthusiast and
runs his own blog on all things EV dedicated to the Indian market.
In this edition, he shares a data-driven comparison of EV markets
in the USA, Europe, China, and India, highlights the initiatives of
the Indian private sector and its government to boost EV sales, and
previews the challenges in the road ahead. The Indian auto market
is unique because of its high reliance on two-wheelers and
three-wheelers, a segment where India sells a majority of its EVs
right now. As a cash and mileage conscious society, keeping the
price-point low will be critical to draw EV consumers. I’m sure
you will find this article insightful and informative.

In this edition, we also share the second part of a three-part
series of an interview between John McElroy and Co-Chair of
DW’s EV Initiative, Bob Weiss. The interview covers a lot of
ground – from John’s view of the rate of adoption of EVs
(spoiler alert: John does not believe that the government and
industry projections for 2030 will be met), discussion of evolving
game-changing technology that will materially impact customer
acceptance, the future of EV start-ups, traditional OEM
competitiveness, and the prospect and timing of Chinese EV
manufacturers to enter the U.S. market and their potential impact.
I am confident you will enjoy reading John’s candid,
informative and entertaining perspectives on these timely and
important issues.

Lastly, on a personal note, it’s been a pleasure to have
been on this ride as the editor of Plugged-In for the past
year. When I ventured on this journey, I was doubtful of the
newsletter’s survival but here we are, going strong and
collaborating more than ever on our shared love for EVs while
having a front row seat to this wild time in automotive history. I
want to thank all our contributors so far, especially the guest
authors who shared their industry perspective, and most of all, the
readers. I’ll continue to be part of the firm’s EV Advisory
Board and look forward to staying…Plugged-In!

Rasika A. Kulkarni | Editor and Associate

Electric Vehicles in India – Challenges and Opportunities


Global sales of Electric Vehicles (EVs) in 2023 reached a record
13.6 Mn units. Of this, 9.5 Mn were Battery EVs (BEVs) and the rest
were Plug in Hybrid EVs (PHEVs). Penetration of EVs touched 16% of
total new vehicle sales of around 86 Mn in 2023. EV sales in 2024
are expected to reach 16.7 Mn units according to Bloomberg NEF. The
major markets for EVs are USA, Europe, and China – each
having unique characteristics.

US Market

EV sales in the USA were 1.19 Mn units in 2023 with a
penetration of 7.6% of the total passenger vehicle market of 16.65
Mn. Sales are expected to rise to around 1.7 Mn in 2024 with a 10%
share as prices have started falling, supply is outpacing demand,
and after a period of volatility, costs have begun declining.

The Total Cost of Ownership (TCO) of EVs is already quite
favorable compared to equivalent Internal Combustion Engine (ICE)
vehicles. The initial price difference between EVs and ICE vehicles
has narrowed and with tax credits under the IRA, is likely to
disappear. The average price of a new EV is around $50,000. Most
manufacturers are positioning EVs at the premium end of their

Tesla is the market leader with a 55% share. It has set up a
charging infrastructure which caters to its own products. Other
manufacturers, to address customer anxiety, have signed up to
access this infrastructure.


In 2023, EV sales rose to 3.3 Mn in a total car market of 14.4
Mn – a penetration of around 23%. Germany has ended all
subsidies for EVs as penetration has crossed 35%. EV sales in 2024
are expected to be 3.6 Mn units. Average prices of EVs are around
$60,000 – with an emphasis on luxury and high end models.

Europe is likely to become a competitive battleground with the
imminent entry of Chinese EVs especially in the middle and low
price segments. Geely already owns Volvo and Lotus. BYD, which
overtook Tesla in EV sales in the latest quarter, is setting up an
EV plant in Hungary.


China sells more EVs than the rest of the world put together
with a 60% global share. In 2023, EV sales hit 8 Mn in a total car
market of about 22 Mn – a penetration of over 35%. In 2024,
EV sales are likely to reach 9.7 Mn even as subsidies have been
withdrawn. There are over 90 EV brands, mostly domestic, with
prices ranging between $5000 and $90,000. The market leader BYD
alone sold 3 Mn EVs in 2023. With well developed supply chains and
economies of scale, Chinese manufacturers can innovate rapidly, cut
cycle times for new products, and sell low priced EVs with superior
technology – infotainment, sound, and connectivity. These
factors can make Chinese manufacturers formidable competitors as
they expand globally.


In 2023, EV sales in India reached 1.53 Mn – a growth of
50% year-on-year. Of this, almost 56% (858,000 units) were electric
2 wheelers (E2Ws) and 38% (576,000 units) were electric 3 wheelers
(E3Ws). Only 5% (81,000) were electric cars (E Cars) in a market of
about 4.1 Mn. Penetration of E2Ws has reached 6% while for E3Ws it
is 54%. EV sales are poised for rapid growth in the coming

The government’s main incentive scheme, Faster Adoption and
Manufacturing of Electric Vehicles, now in its phase II (FAME2)
provides a subsidy based on battery capacity for E2Ws, E3Ws and E
buses (with conditions and limits). This subsidy is intended to
bridge the price gap between EVs and ICE vehicles. With this, the
TCO for E2Ws is already lower than comparable ICE vehicles.
Subsidies have been reduced midyear in 2023. Nevertheless, after a
brief dip, sales have rebounded and are on a rising trend.
Penetration of E2Ws is likely to reach 40% by 2030.

E Cars for personal use do not get any subsidy. Hence sales have
been driven by TCO alone. The difference between the TCO of ICE
cars and E cars is currently barely under 10%. With several E Car
launches slated for the next two years, this is likely to reduce
further and sales are likely to grow exponentially. Penetration is
expected to rise from the existing 2% to around 20% by 2030.

Domestic players dominate the EV market in India. In E2Ws, Ola
Electric, with 30% market share, TVS Motors (20%) and Ather
Electric (12%) are the leaders. In E Cars, Tata Motors with 67%
share is the market leader. BYD has not received permission to
invest in India. Most E Cars are currently sold in the price band
of $10,000 and $20,000.

Charging infrastructure has been a major inhibitor so far. E2Ws
are often charged at home. For E Cars, a major initiative to
resolve this problem is underway. Petroleum retailing companies
such as Indian Oil Corporation, Bharat Petroleum Corporation and
Hindustan Petroleum Corporation have announced plans to add fast
battery charging at around 10,000 fuel stations on national
highways – often in partnership with electric utilities or
charging equipment suppliers. Further, all housing projects, hotels
and multiplexes are being encouraged to install charging
infrastructure in their premises. The results will be visible in
the next 2-3 years.

Challenges and Opportunities between USA and

The biggest challenge for other countries is competition from
Chinese EV producers and the head start they enjoy in volumes,
costs, technology, and supply chains. The critical technologies
relating to materials, batteries, motors, and power electronics are
owned by Chinese firms. The entire value chain from mining of
lithium and rare earths to refining and component making is
dominated by them with a share of 70-80% of global output.

With geopolitical tensions rising, Governments across the world
are responding with a range of policy measures. In India, the
policy thrust is to incentivize domestic production of EVs and
major components. India’s Production Linked Incentive (PLI)
scheme for EVs, applicable over a 5 year period, covers two

  • Automotive Sector: The incentive is up to 18% of the eligible
    sales value of zero emission vehicles (BEVs and Hydrogen Fuel Cell
    EVs) and their components. The outlay is about $3Bn.

  • Advanced Chemistry Cells(ACC): The objective is to attract
    investment of approx. $5Bn in battery cell manufacturing (Li Ion
    and future developments like Sodium Ion and Solid State) with an
    outlay of about $2Bn.

At the same time, higher tariffs have been imposed on imported
components and EVs to attract investments from domestic and foreign
firms to India’s large potential market, with PLI to offset
startup costs. However, there are concerns that this could lead to
a high-cost structure hurting global competitiveness.

An expanded subsidy scheme for customers (FAME3) is expected to
be announced in February 2024. It will focus on E2Ws and buses and
provide an upfront subsidy on the purchase price. Eligibility
criteria will include local content norms.

Analogously, in the USA, the IRA intends to provide subsidies to
customers and incentivize domestic manufacturing and value

The full impact of these policies will be known in the next few
years. In India for example, the FAME program has led to some
complaints of wrong declaration and incentive claims by a few
manufacturers resulting in suspension of their incentive payments.
The first PLI claims are being processed and there are instances of
shortfalls in achieving committed investment and output goals and
delays in the release of incentive payments. Resolving such
problems will be crucial for a smooth ramp up of investment and

The EV markets in the USA and India have different product
priorities and price points with little overlap. India has the
potential to develop into a global hub for E2Ws, E3Ws and small
E4Ws (passenger and commercial) at low to medium price points. US
manufacturers seem to be focusing on high end EVs at present. Only
Tesla has plans for a mid-priced model at about $20,000 for
entering India.

India and the USA can however work together in overcoming some
of their shared challenges. One area of mutual interest is raw
materials mining & refining, and components for EVs. While
current technologies are dominated by the Chinese, the focus could
be on next generation technologies in materials, batteries, motors,
and power electronics. Collaborations at the University level for
specific research programs could provide benefits for all

Concluding Remarks

Though the US and Indian EV markets are evolving differently,
they face similar challenges. A collaborative approach to address
them – especially for regulations, incentives, supply chains
and technology development – can prove beneficial to
organizations in both countries.

Rajendra Bhinge | Chairman of Antennae Ventures
Pvt. Ltd.

Interview with John McElroy: Part 2

Bob: Welcome back to Plugged In. Let’s pick up
where we left off in the interview published in our January
edition. We were speaking about the current state of EV adoption
and how in your view it was going to take longer than predicted to
achieve the government and OEMs’ objectives.

Question 1

Bob: When do you believe that EVs will represent 50% of
sales of new vehicles in the US? Do you believe the Biden objective
of 2030 is likely to be achieved?

John: Given the many variables that we discussed last
time, including macro and micro economic conditions, geopolitical
considerations, whether government support will continue and, if
so, at what level, progress in reducing costs of EVs, etc., it is
impossible to predict with any certainty. However, I don’t
believe that it will be accomplished by 2030. I believe that 2024
and 2025 will be difficult years for the transition under the best
of circumstances, with the OEMs continuing to incur significant
losses and experiencing lack of robust EV sales. However, I believe
that starting in 2026, the tide will begin to turn with significant
sales demand, losses materially diminishing as some OEMs reach
scale, critical charging infrastructure increases, and vehicle
prices decline. I believe that things will improve markedly toward
the end of this decade in terms of customer acceptance.

By the 2025-2026 timeframe, we are going to have 2nd generation
batteries, the costs are going to come down, the ranges are going
to expand, the charging time is going to come down. We are also
going to see a much better situation with public charging than we
do today and that’s going to start to change a lot of minds, or
maybe not change minds but people saying yeah, I was looking for
this to happen and now I’m ready to get an EV. So, what I wrote
in 2018 about what I thought was going to happen, pretty much
happened. As I look toward the next five years, I think the
industry is really going to struggle. 2024, 2025, 2026 – very
difficult times. They’re going to be losing money but in 2027,
2028 I really see the hockey stick inflection happening where EVs
really start to take off in terms of sales and profits for the

Finally, I think there is one technology once it is generally
available that will be a game changer – bi-directional

Question 2

Bob: What is bi-directional charging and why do you
think it will be so important in terms of customer adoption?

John: The EV owner plugs in his/her EV at home at night
and you fill up the battery with cheap electricity when rates are
low and then during the day, say when you are at work or even at
home, you sell electricity back at high rates to the grid by a
converter system embedded in the EV charger. And so, you become an
arbitrager of electricity. And, there’s different studies and
the numbers are all over the map on this but in the end, you make
money by arbitraging this electricity. It can also be used to
supply electricity from the EV battery to the owner’s home. And
in some cases, it looks like you may not have an electricity bill
at the end of the month and so you are essentially driving for
free, at least from a fuel standpoint. And so, I think it’s
possible that once all EVs have bi-directional charging capability,
the case for buying and driving an EV will be indisputable. I
believe Hyundai and Nissan’s cars already have this this
technology. Tesla’s, interestingly, do not because Elon sells
powerwalls and he wants you to buy those, not use your car to do
that. So it may be sometime by the end of the decade or early
2030’s, EV sales increase exponentially.

Question 3

Bob: What are your views regarding the future of the EV
start-ups? Are they likely to succeed?

John: There has been an amazing change. If you go back
just 2 years ago, EV stocks were the darling of Wall Street. There
was the fear of missing out; everybody piled on. Companies like
Rivian, who had never built a vehicle, had a higher market cap than
General Motors or Ford, which was mind blowing. So did
Fisker’s, so did…I mean fill in the blank. Now their stock
prices have all crashed and they are running into real problems in
getting capital. Sources of capital are far more leery of EV right
now, in light of higher interest rates and the like. The capital
has not completely dried up but it largely has. And what the other
start-up’s failed to remember, or just ignored, is that Telsa
lost money for a decade and the only reason it was able to survive
is that Elon Musk has the uncanny knack to pick up the telephone
and say “hey guys, I need another $2 billion” and he gets
it that afternoon. Nobody else can do that. I mean, nobody. And so,
all the legacies sort of laughed when Tesla was struggling through
production hell because, even Mary Barra said, wait until we get
there, we’ll show these guys how to do it because we’ve got
a history of being able to launch cars.

Now, even all the legacies are struggling on all of this. And
so, I think start-up’s are largely not going to make it. Tesla
already has. They’ve turned the corner. Rivian, I think, will
make it. They’ve got their sugar daddy, Amazon, with $100
million worth of orders for their vans. They are getting orders
from others now. Amazon lifted their exclusivity rule on them.
They’ve got a 2nd generation product and plant on the way. They
are burning through cash but it looks like they might be able to
hold on for another 2 to 3 years, when as I mentioned earlier, I
think we are going to see the hockey stick happen with electric

Lucid may make it as well because its largest investor right now
is the Saudi Sovereign Investment Fund and I don’t think they
are going to allow Lucid to go under because they’ve made such
a big bet on it. They’ve also enticed Lucid to build an
assembly plant in Saudi Arabia, which, I think, is a hugely bad
thing to do, but if it keeps the capital flowing it’s probably
a smart move. So the other start-up’s, I don’t think they
will have much of a chance.

In summary, the difficulty in obtaining critically needed
capital and slowdown in consumer adoption in the short term will
result in most of the EV start-ups failing, in my view, with the
possible exceptions of Rivian, which is backed by Amazon, and
Lucid, backed by the Saudi Sovereign Fund. I believe the balance of
the start-ups will not survive.

Question 4

Bob: In your view, will the established OEMs be able to
produce competitive EV vehicles?

John: The legacies will struggle but they will probably
figure out how to do this, i.e., making EVs at a profit.

I’ve always liked GM’s strategy. They’ve developed
what they call the Ultium Platform and the Ultium Battery Pack.
Essentially, you have this skateboard chassis and you can drop any
kind of body style that you want on it. It can be a sedan; it can
be a crossover; it can be an SUV; it can be a pick-up truck; but
the guts of each of those vehicles pretty much use the same key
components. So, even if you do spread it across multiple models,
the battery pack, the motors, the inverter, the power, electronics,
everything else is pretty much shared. And, that gets you the scale
that you need.

Question 5

Bob: You didn’t mention the technology problems
being experienced by the OEMs as a material factor impacting
consumer adoption. For example, the software quality problems being
experienced by the new electric Chevrolet Blazer, which prompted GM
to instruct its dealers to stop selling the Blazer. What are your

John: It is not uncommon for there to be a period of
working out the bugs in new product offerings. This is particularly
true when you are dealing with a radically different product
technology. The OEMs have historically been successful in quickly
and efficiently remedying the problems. I think that will likely be
the case with EVs.

Question 6

Bob: What about the Chinese EV manufacturers? Do you
believe that they will succeed and how do you assess their
intentions and ability in entering the U.S. market?

John: It’s a fast moving story here. You know, as
far as China goes, Europe is the canary in the coalmine because
Europe has a much lower tariff, 10% tariff on imported vehicles.
Although the political environment in the EU is changing to be more
restrictive of Chinese imports, so far the Chinese have found the
EU markets accessible. There has been a lot of talk of raising
import tariff on Chinese cars in the EU and I believe that will
probably happen. But, you know, what I think, keeping an eye on
what happens in Europe is probably going to be a good indicator of
what happens here.

But in fact, the big worry for the Chinese coming to America may
not be with EVs. It might be with internal combustion vehicles
because since COVID and the chip shortage, car prices in the United
States have gone up 30% – 30% in a three-year period, even less
than 3 years and that has taken literally millions of households
out of the new car market. In fact, people are struggling to find
even a used vehicle that they can afford because as we’ve
priced out lower income or even middle income families from the new
car market, that’s left wealthier people to buy vehicles and
the vehicles they buy are more expensive so even when they come off
lease in 3 years, or whatever, they’re more expensive than what
most people can afford and so that really opens the door for the
Chinese. You know you can buy a very nice sedan, Chinese-made
sedan, meet all the emission standards, fuel economy standards,
safety standards for $14-15,000. So even with a 27.5% import
tariff, you could still, theoretically sell them in the American
market for under $20,000. There will be buyers for that. There will
be dealers who will say yeah, I’d love to get that franchise.
Ironically, the car companies most threatened by a move like that
would be the Japanese and the Korean automakers because the
Americans have largely abandoned passenger sedans of any kind and
the only ones left playing in that segment right now are the
Japanese and the Koreans. They would actually be under the most
threat. Now, having said that, NIO, for example, a Chinese
automaker that sells premium cars, says it’s going to have an
EV in the American market by 2025 at the latest and it’s not
going after the lower end of the market. Although I have never
driven a NIO, based on all the reports that I’ve seen, their
cars are terrific. They’ve got a headquarters somewhere in
southern California. So, they will be coming into the market.

The one to really keep an eye on is BYD which has
out-Tesla’d Tesla. It out sells Tesla, at least in China. I
don’t know if it will do it this year, but certainly, next year
it will surpass Tesla in electric vehicle sales. It’s highly
vertically integrated even more vertically integrated than Tesla.
From everything that I’ve seen regarding BYD, (I have been in
their cars even though I haven’t driven them) they are as good
as anything in the world and I personally believe the growth rate
that BYD is going through would suggest the possibility of it being
the biggest car company in the world sometime in the next

I think there is no question that the Chinese will come into the
U.S. market. Whether they have to just absorb the import tariff,
whether they do a CKD or completely knock down an assembly where
they bring in components from China and are able to avoid the 27.5%
import tariff, even if they may not qualify for the $7,500 tax
credit. In addition, they are looking at using Mexico as a backdoor
into the U.S. market by building vehicles in Mexico and then as
part of the USMCA, gaining access to the American market.

Bob: Thanks again, John. Very much appreciate your
insights and candor. I look forward to discussing your broader
perspective of the China-US trade relationship during our next

A Second Look at the Second Look

As you may recall, in the March, 2023 edition of Plugged In, I
wrote an article under the heading “A Second Look,”
questioning whether the criticism of Toyota’s, at that time,
contrarian multi-path strategy of pursuing hybrids as well as EVs
in contrast to the “all in” EV strategy of most other
OEMs, was justified. I noted that an article appearing in the Wall
Street Journal entitled, “Toyota Needs a New EV Roadmap”
was representative of the attacks on Toyota’s strategy. In sum,
the Wall Street Journal article argued that Toyota’s multi-path
strategy was a serious miscalculation. The criticism continued in
an article in the June 2023 edition of the WSJ entitled,
“Toyota Boss Faces Pushback Over EV Strategy in Shareholder

Inthat edition of Plugged In,after reviewingthe
numerous obstacles and challenges to adoption in the near and
medium term(e.g.availability of raw and processed
materials, uncertainty regarding adequate grid capacity and
charging infrastructure, etc.), I concluded, “it seems tome
thatwhen one considers the many material challenges and risks to
the aggressive timeline for full scale EV transition, Toyota’s
strategy may well prove the better strategy in the long

One year later, it appears that the pendulum has shifted
materially in Toyota’s favor, as illustrated by the following
two articles. It now appears that Toyota was on to something with
its multi-path strategy. In a February 6, 2024, article appearing
in the Wall Street Journal entitled, “Toyota Cashes In on Booming Hybrid
Sales”, the author reports that Toyota had forecasted a
$30.3 billion net profit for the fiscal year ending in March 2024,
largely due to higher sales of hybrid vehicles in all of its major
markets. Toyota projects the upward trend in hybrid sales will
continue with hybrid sales increasing from 3.4 million in 2023 to 5
million by 2025.

In a second article entitled, “GM Went All In on EVs. Dealers Say Buyers Want
Hybrids” appearing in the January 29th edition
of the Wall Street Journal, the author reportsthat
“Dealers who serve on the advisory committees to the automaker
have urged executives in several recent meetings to add hybrids to
GM’s lineup. …the dealers said they expressed concern that
more customers are looking for a middle ground between conventional
gas-engine cars and EVs, which are more expensive and require
regular charging.”

Ford Chief Financial Officer, John Lawler is quoted as saying,
“With EV adoption slower, hybrids are going to be a bigger
part of the business.”

While benefiting from the sales surge in hybrids, Toyota
continues to invest in its EV capabilities. It was recently
announced that Toyota is investing an additional $1.3 billion in
its Georgetown, KY factory. Toyota will build its three-row,
all-electric SUV in Georgetown and, in addition, the factory will
house a battery pack assembly.

In sum, although Toyota’s electrification roadmap was not as
robust as its competitors, given the lag in market adoption, it
appears that it will not suffer as a result. In fact, it appears to
be profiting. Whether it was good strategic planning or just luck,
it looks like Toyota will emerge as a winner in the race to provide
the consumer the right product at the right time.

Moral of the story – sometimes it pays to defy
conventional wisdom.

Bob Weiss | Of Counsel and Co-Chair, EV

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.


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