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India & the Future of Automotive Industry

22 Jul 2021

What will lead to the change in the automotive industry? Would it be Artificial Intelligence (AI), Internet of Thing (IoT), alternate fuels, or Electric Vehicles?  Or would it be an amalgamation of all these?

Let’s find out how each of these aspects will shape the future of the automobile industry:

Electric Vehicles (EV)

The global automotive sector is witnessing massive disruptions, and EV is leading the change. Owing to lower emissions and vehicle operating costs, among others, it is gradually becoming the preferred choice for consumers. According to the CII Deloitte Report on ‘Future of Mobility in India: Modern Automotive Technologies,’ 40% of consumers want hybrid electric/all battery electric vehicle as their next vehicle.

To promote use of EVs, India launched the Faster Adoption and Manufacturing of (Strong) Hybrid and Electric Vehicles (FAME) India Scheme in 2015. While FAME I supported about 2.8 lakh electric and hybrid vehicles by way of demand incentive, FAME II was launched in April 2019 with an outlay of INR 10,000 Crore. Apart from this, the Goods and Services Tax (GST) has also been reduced from 12% to 5% for EVs sold with batteries. To further boost the adoption of EVs, the Ministry of Road Transport and Highways has exempted EVs from permit requirements and has recommended states reduce or waive off-road taxes.

Several Indian automakers are entering into the production of EVs, manufacturing of Advanced Chemistry Cell (ACC) batteries, and other components related to EVs. To promote ACC batteries, the government recently announced an INR 18,100 crore Production-Linked Incentive (PLI) scheme for ACC manufacturers. The government is also accelerating the installation of electric charging facilities across the country.

With the increased adoption of EVs, it is expected that the manufacturing cost would go down, better technologies for an efficient battery would be in place, charging infrastructure would improve, and the consumers would be helped with pocket-friendly financing and insurance costs.

EV is the next big thing in the world, and India by the virtue of being the fourth-largest auto market, driven by urbanisation and growing income levels is poised to become a leader in the market.

AI & IoT

From driverless cars to voice commands to start the car, AI is increasingly getting integrated with automobiles. Internet connectivity in cars is on the rise, and manufacturers are making sure that the vehicles become more interactive.

According to a report by PWC, 40% of the mileage driven in Europe could be covered by autonomous (self-driving) vehicles in 2030. For a change, apart from traditional car manufacturers, leading tech companies are investing heavily in driverless cars and leading the chart.

Autonomous cars have the capability of navigating roadways, (complex, reversible lanes) and even go for lane change depending on the traffic. Currently, most autonomous vehicles run on level 2 (Partial Driving) of automation. Gradually we are moving towards level 3 (Conditional Driving Automation) and level 4 (High Driving Automation) of automation that will make autonomous driving more intelligent and safer.

Level 4 automation will intercept system failure and intervene if things go bad. However, infrastructure and legislative issues have delayed the adoption of a high degree of autonomous driving.

IoT, on the other hand, is connecting vehicle owners with their vehicles both on and off the vehicle. Voice commands to switch on the car, controlling temperature, and starting the music system, along with remote starting of car and setting air conditioning are some of the features that a connected car can perform. IoTs are also enabling cars to inform their owners about the possible traffic jam and showing the better route to reach the destination. These are some of the features that are being used currently and as technology progresses further, we will see increased connectivity where cars could interact between themselves. It would aid in road safety and require an amalgamation of AI and IoT.

Alternate Fuels

The CII Future Mobility Show 2021 focussed on technology and fuel choice. India is targeting 20% ethanol-blending with petrol by 2023-24 and is aiming to achieve 100% ethanol-run vehicles in the longer run. India has also allowed ethanol-based ‘flex engines’ to reduce the dependability on fossil fuels.

Hydrogen fuel cell electric cars are also making an entry into the market. A push for green hydrogen will make this option attractive and sustainable.

The next few years would be pivotal in bringing India to the centre stage of the automotive industry, and electric vehicles will lead the charge. The future of the automotive industry is electric, sustainable, renewable, cost-effective, and technology-driven.

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