India currently faces severe pollution, leading to enormous health issues. Given that more than half of particulate pollutants in the air arise from vehicle emissions, there is a growing focus on cleaner transport, especially battery-powered electric vehicles (EVs). Thanks to government policies and industry investment, the Indian EV sector is growing rapidly, with Arthur D. Little (ADL) forecasting that EV sales will exceed 10 million units by 2030.
EVs in India – challenges to sustainability
However, while EVs are more sustainable when on the road, the environmental and social impacts of the entire EV value chain raise concerns. These include mineral extraction, refining, the battery-production value chain, energy production, vehicle production, vehicle use, electricity generation for charging, and vehicle end-of-life recycling.
Permanent ecological damage from air, water, and soil pollution; poor waste management; and human rights issues due to child labour all highlight the dangers associated with irresponsible EV production. During the use phase, EVs are only as green as the energy used to charge them. For example, if electricity is predominantly generated from burning coal, then switching to EVs only decreases greenhouse gas (GHG) emissions by ~5% compared to a typical gasoline car sold in India. Finally, batteries need to be recycled correctly to prevent toxic chemicals leaching from landfills and polluting water sources.
Seven key factors to drive a sustainable value chain
That means that as India establishes its EV value chain, it must lay a solid and sustainable foundation. Achieving this requires a focus by policymakers and industry on seven sustainable solutions:
1. Sustainable raw materials
Indian battery production requires the import of raw materials. Government policies need to minimise the social and environmental impacts of mining for these materials, penalising sourcing from countries with lax regulation and incentivising responsible sourcing through trade agreements. Additionally, the industry and the government could focus on building refining infrastructure in India.
2. Incentivise different technologies
Battery-powered EVs have already benefited from Indian government policies and subsidies. However, alternative technologies such as hydrogen fuel cell EVs have a potential use in heavy-duty vehicles. India needs to start projects to assess their potential and provide them with similar incentives.
3. Decarbonize electricity usage
As Indian players establish their battery-production and EV manufacturing facilities, the government should incentivize them to install them close to renewable power sources for a better energy mix.
4. Recycle EV batteries & motors
Batteries and e-motors should be recycled to recover valuable minerals, with the government shifting recycling responsibilities to manufacturers and establishing targets for the amount of recycled raw materials used in batteries.
- Innovate in R&D
On the industry side, companies should step up research into new battery chemistries. These aim to be eco-friendly, cost-efficient, and capable of fast charging with much less environmental impact due to easier disposal and abundant raw materials.
- Decarbonize charging
Decarbonizing the energy used to charge EVs is critical to sustainability. That means stepping up the roll-out of renewable energy sources, particularly solar, to enable home or office charging. This should be combined with smart grid control to allow bidirectional charging, adding storage capacity to make charging stations more efficient.
- Integrate the value chain
Taking a holistic ecosystem approach is key to minimising environmental impacts. Collaboration and information sharing between stakeholders enable transparent and innovative decision-making. For example, recycling plants could be situated closer to manufacturers to decrease the cost of extracted materials.
Policy-making and industry initiatives can direct the growth of the EV value chain in India toward a sustainable path. This will create a strong foundation for producing clean vehicles, contributing to India’s ambition of zero emissions and countering the severe health hazards caused by pollution.
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By Barnik Chitran Maitra, Managing Partner of Arthur D Little, India and South Asia
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