Future of EV

Bleak OR Bright

ASSET MANAGEMENT

PRIVATE & CONFIDENTIAL. NOT FOR CIRCULATION

 Optimal Capital Utilization
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Siddhartha Rastogi Private & Confidential – Not for circulation

 Optimal Capital Utilization
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 "As of 2016, the number of American car companies that haven't gone bankrupt is a
grand total of two: Ford and Tesla.“

Elon Musk

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Electric Vehicle from earliest era of human history - 1891

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Timeline – The Evolution

YEAR

1901 Thomas Edison works to develop better EV batteries ,Worlds First Hybrid car developed.

1997 Toyota introduces Prius, worlds first mass-produced hybrid.

2008 Tesla launches the commercial production of Roadster EV.

2009-13 US government installs 18,000 residential, commercial, public chargers.

2014 Tesla breaks ground on massive gigafactory 1 battery plant in US state of Nevada.

2017 India’s power minister suggests country aims for EV-only sales by 2030.

2020 Tesla delivered annual sales of half a million cars.

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The great Delay – Oil Cartels

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Why India is compelled to move fast on EV timelines?

 India imported $102 billion worth of oil (80% of consumption

requirement)

 World’s 3rd largest oil consumer

Oil Burden
 The crude bill is ~4% of the country's GDP.

 99.6% of gasoline and 67% of diesel demand is from the automotive

sector

 The cost of serious health consequences of air pollution is 5.4% of

GDP.

 Out of 20 most polluted cities, 14 are in India

Health Impact
 Average air pollution levels are 10x above WHO permitted levels

 Transport Sector contributes 23% to GHG emissions

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 8

Types of EVs

Consumption: Fuels Fuels Fuels and electricity Electricity

Engines primarily, Motors primarily,
Engines Motors
Driven by: motor secondarily Engines secondarily
Easy to refuel, long Easy to refuel, less fuel Environment friendly,
Easy to refuel, less fuel
driving range, high consumption and govt support, low
consumption
Advantages: speed emmisions maintenance
High price, limited Short range, low
High fuel cost Heavier vehicle weight
Disadvantages: models speed

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 9

Global Electric Vehicle Market Trend… (1/2)

Global EV volume growth

 The global sales of EVs in H1CY21
in '000s 2020 H1 2021 H1 EV Growth Market
increased by 168% year on year to YoY (%) YoY (%)
413
3.1 million units; whereas the total Europe
1,060 157% 29%

passenger car market declined 16 % 387

China 197% 25%
1,149
globally.
USA 112
 Europe superseded China as the 297 165% 29%

global driver of electric car sales in 14

Japan 12%
20 43%
2020 for the first time in five years,
65
Others 95% 31%
despite the COVID-19 crisis hitting 127

overall car sales. - 200 400 600 800 1,000 1,200

 It was the combination of (i)New attractive models, (ii) incentive boosts by green recovery funds,
(iii)The 95g CO2 mandate, (iv)much-improved availability and intense promotion of EVs.
 The share of EVs in global automobile market increased from 2.5 % in 2019 to 3% in H1 2021.
 Europe is further ahead in terms of EV share: EVs increased from 3.3 % 2019 to 15% in H1 2021,
counting the EU and EFTA countries, including UK.
 China’s EV mix increased from 5.5% in CY20 to 12% in H1 2021

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Global Electric Vehicle Market Trend… (2/2)

 One out of eight global plug-in sales were EVs Penetration (per 1000 people as
on Dec'20)
in Germany last year.
India 0.1
 Many European markets have doubled or
China 3.3
tripled their EV sales vs 2019 and Europe
US 5.4
captured 43 % of global EV sales in 2020
Europe 6.1
vs 26 % in 2019.
Germany 8.4
 Norway has the highest market Netherlands 17.7
penetration per capita in the world, and Sweden 20.4
also has the world's largest EV market California 21.2
share of new car sales 74.7% in 2020. Norway 90

0 20 40 60 80 100

 Over 10% of all passenger cars on Norwegian roads were EVs in October 2018, and passed 15% in
2020.
 EVs have reached 7.2% of new car sales worldwide in 2021.

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EV Penetration In India

 Cumulative EV sales numbers for FY2021 are FY19 FY20

2,38,120 units, down 19.41% year on year EV sales of total volumes
16.00% 14.30%
14.10%
(FY2020: 2,95,497). 14.00%
12.00%
 Electric two- and three-wheelers declined 5.37% and
10.00%
37.18% respectively. 8.00%
6.00%
 The bulk of the e-two-wheeler demand came from
4.00%
low-speed models which accounts to 67% of total 2.00% 0.60%0.90%
0.11%0.12% 0.04%0.08%
e-2W. 0.00%
2W 3W PVs CVs
 The bulk of these sales came from the Tata Nexon EV
and MG ZS EV, which together accounted for 89% of EV Split FY21
PV
total e-PV sales. 3% CVs
0%
 At present, less than 7% of all e-two-wheelers in
2W
India are financed. v/s 80% financing of ICE 2Ws, 31%

a primary reason being that the replacement value is

not easy to calculate. Further, since the bulk of
electric two-wheelers sold in India are low-speed 3W
66%
ones and do not require registration, traceability
becomes an issue for financiers.
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Battery for EVs

Electric Vehicle Cost Breakdown

 India EV battery prices are much higher than global EV
battery prices.
 OEMs imported EV batteries in the price range of Systems,
USD200-250/kWh, 30-60% above global prices. Equipmen
Battery
 More importantly, localization will be key, as such, the t,
Cost
Others
government is keen to localize EV batteries. 35%
20%
 Initially, it may be limited to packaging, which is only
10-15% of the value of an EV battery. Chassis
and Body
parts
20%

Drivetrain
25%

 India also doesn’t control much in the

way of raw materials (which are 50%
of the EV battery cost
 Major raw materials component are:
 Lithium
 Nickel
 Cobalt

PRIVATE & CONFIDENTIAL Pg 13

Ambit Asset Management
 Battery: Geographically and Organizationally Concentrated

 The combined market share of the world’s top EV Battery Market share of 5 players
30.0% combined 80%
five battery makers – Panasonic, LG Chemical,
24.6% 24.0%
Samsung SDI, CATL and BYD has risen from 56% 25.0%

in 2017 to ~80% in 20. 19.2%

20.0%

 This trend will accelerate due to: 15.0%

(1) Pressure on battery prices as quality
10.0%
requirements increase 6.3% 5.8%
5.0%
(2) The phasing out of subsidies on EVs
(3) Lingering obstacles to technological innovation. 0.0%
LG Chem CATL Panasonic Samsung BYD
SDI

 About 58% of the world's lithium reserves are in Chile. In Chile, lithium mining uses nearly 65%
of the water in the country's region, one of the driest desert areas in the world, to pump out
brines from drilled wells
 50% of world cobalt reserves are in Congo. About 20% of cobalt supplied from the Congo comes
from artisanal mines where child labour and human rights abuses have been reported.

PRIVATE & CONFIDENTIAL Pg 14

Ambit Asset Management
 Cabinet Approves PLI Scheme

 In May 2021, India approved a ₹18,100 crore production-linked incentive (PLI) scheme for
building Tesla-style giga factories to manufacture batteries.
 The plan is to set up 50 giga watt hour (GWh) manufacturing capacity for advance chemistry cell
batteries by attracting investments totaling ₹45,000 crore.
 One GWh (1,000-megawatt hour) of battery capacity is sufficient to power 1 million homes for
an hour and around 30,000 electric cars.
 Eligibility:
The beneficiary firms have to achieve a domestic value addition of at least 25%
Mandatory investment of ₹225 crore /GWh within 2 years (at the mother unit level) and
raise it to 60% domestic value addition within 5 years
 Such battery storages will cater not only to electric vehicles but also to the consumer electronics
industry and electricity grids

 In Sep 2021, ₹ 26,000 cr PLI scheme for electric and hydrogen fuel cell vehicles technology. The
scheme is expected to generate investments of over ₹ 42,500 cr in five years and incremental
production of over ₹ 2.3 trillion.

PRIVATE & CONFIDENTIAL Pg 15

Ambit Asset Management
FAME –II Policy (Faster Adoption and Manufacturing of EVs)

 Under FAME – I, the total outlay was Rs 900 crores. However, the total fund utilization was only Rs 530
crores out of which Rs. 340 crores was towards vehicle subsidies.
 It was initially launched for 2 years beginning FY 2016, however it was later extended till 31st March,
2019.
 In Fame - II, the share of outlay dedicated to charging infrastructure out of the total budget allocated for
EVs in FAME1 increased from 3.8 per cent to 10 per cent in FAME 2.
Total Outlay for FY20-FY22

 Demand incentives is 86% of total

Approx Approx Total
outlay: Rs 15bn/50bn/35bn in Vehicle No. of Battery incentive incentives Allocation
Type vehicles Size (kWh) per vehicle Max price (Rs in mn) (%)
FY20/21/22 respectively. 2W 10,00,000 2 20,000 1,50,000 20,000 23%
 Incentive is available in the form 3W 5,00,000 5 50,000 5,00,000 25,000 29%
PVs 35,000 15 1,50,000 15,00,000 5,250 6%
of upfront reduced purchase price.
Hybrid
 It also focuses on localization by 4Ws 20,000 1 13,000 15,00,000 260 0%
e-Buses 7,090 250 50,00,000 2,00,00,000 35,450 41%
specifying eligibility criteria.
 E.g only Lithium battery vehicles Total incentives (Rs in mn) 85,960 100%
Charging Infra 10,000
with 50% local content will be
Admin and misc. 4,040
eligible for subsidy
Total Expenditure 1,00,000

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Other Government Initiatives
1 2
Go Electric Campaign
• As a part of the campaign, the government will
conduct (a) 200 stakeholder workshops on
various EV solutions, (b) 1,000 roadshows and
meetings with resident welfare associations and
urban local bodies, (c) 500 technical talks with
manufacturers and research bodies, and (d) 200
capacity building seminars
3 4
State Policy
• Supply Side incentives like capital interest subsidy,
stamp duty reimbursement offered by UP, AP,
Tamil Nadu and Telangana to attract investments.
• Delhi EV policy mandates 100% conversion to e-
2W fleet by FY25, Uttarakhand targets 100% e-
buses by FY30
Ambit Asset Management
Make In India
• Custom duties on EVs and components import
were hiked from 15% in FY19 to 30% in FY20.
Govt aims to promote EV manufacturing in India
and build giga factories in India like Tesla.
• While high custom rates will help lower Chinese
low quality imports, the existing price of e buses
and PVs will rise.
Semiconductor
• The government is planning to provide incentives
worth Rs 76,000 crore towards setting up over 20
semiconductor design, components
manufacturing and display fabrication (fab) units
over the next six years, in a bid to make India a
hub for electronics
PRIVATE & CONFIDENTIAL Pg 17
Who will win the Global EV Race?

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EV – the Saviour Or Destroyer – Climate Change

Cadmium
•Intake by ingestion of contaminated food crops
•Accumulation in the human body may cause kidney diseases
•Carcinogenic effects.

Cobalt
•Adverse effects on biomass and on physiological activity in crops

Lead
•Intake by ingestion of contaminated food crops.
•Negative effects on nervous systems, kidney and other organs.
•Cardiovascular diseases
•Carcinogenic effects.

Lithium
•Alterations in the development of invertebrates
•Interference with nucleic acids synthesis.
•Accumulation in soil causes severe phytotoxicity.

Nickel
•High oxidative stress in mammalian and terrestrial plant systems
•Disruption of ion homeostasis.

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Hydrogen Vs Lithium

BEV FCEV

Driving Component Electric Motor Electric Motor

Battery, Ultra capacitator Fuel Cell

Energy Source

No emission, Very little/no emission

Not dependent on oil High efficiency
Range depends on the battery type Not dependent on supply of
Features electricity
Available Commercially
Available commercially

Battery price & capacity

Cost of fuel cell
Problems Charging time
Feasible way to produce fuel
High price
Availability of fueling facilities
Availability of charging stations

(source-Energies)

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 Thank You for your patience & Time

Connect with me:

Twitter: @beingsworld @sidgreatest

Linkedin: https://www.linkedin.com/in/siddhartharastogi

Linkedin: https://www.linkedin.com/in/abhishek-vora

Ambit Asset Management PRIVATE & CONFIDENTIAL Pg 21

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