In today’s Finshots, we tell you why flex fuel hybrid EVs (electric vehicles) seem to look like the future of India’s auto industry and the roadblocks along the way.

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The Story

Picture this. You are off on a road trip with your friends. As you drive, you notice that you’ll soon run out of fuel. You switch to the electric mode, seamlessly transitioning to the electric motor, which takes over powering your car. The ride remains smooth and your friends barely notice the change.

You then spot a fuel station up ahead, pull in and refuel. Although you have the option to pick regular ethanol blended petrol, you pick ethanol 100 or an alternative fuel that’s almost completely ethanol with just a little bit of petrol and a binder thrown in. Once the tank is full, you switch back to fuel mode, this time running on ethanol. You hit the road again with the electric mode ready as a backup. The car vrooms along efficiently on the ethanol. And you feel good knowing that you're using cleaner fuel.

This isn’t just a figment of our imagination. It could actually be a reality in the near future. Thanks to Nitin Gadkari, the Union Minister for Road Transport and Highways, who flagged off the Toyota Innova HyCross, the world’s first flex-fuel ethanol-powered EV (electric vehicle) last year. This car not only runs on an alternative fuel but can also operate in EV mode. And vehicles like these could be the future because the Minister has even batted for halving GST (Goods and Services Tax) on them recently.

Now we know what you’re thinking. EVs, ethanol blended fuel, hydrogen or even biogas powered cars and now flex fuel hybrid EVs ― India has so much on its mind. And everything seems to have a promising future. So with its finger in every pie, which idea is it even going to pursue?

Okay, let’s break that down.

Look, India wants to reduce its GDP emission intensity by 45% by 2030. Simply think of it as the total amount of greenhouse gas (GHG) emission we want to cut for every unit increase in GDP (or the value of all the goods and services the country produces). And since 40% of India’s pollution comes from vehicles, it’s important to cut down their emissions.

How do you do that?

Well, your first thought would be to go electric. But EVs aren’t really great for the environment in their current form. And that’s because the massive batteries that power these cars require a lot of nickel, cobalt and lithium. And mining and refining these metals emit a lot of greenhouse gases. Not just that. The electricity that charges your EV comes from fossil fuels since 80% of it comes from burning coal.

And that simply means that switching to an alternative fuel could be the way out. But doing that isn’t easy either. You can’t scale up biogas fuel simply because it comes from feedstock and India doesn’t have enough of it. You can’t whip up hydrogen based fuel either, because it’s expensive and lacks infrastructure.

This means that it might be easier to slowly lean towards flex fuel vehicles that use a cleaner fuel source and are scalable too. Ethanol blended petrol is exactly that. It comes from fermenting the sugar in the starches of grains like corn, barley or sugar. And since India is the second largest sugar producer in the world after Brazil, it makes complete sense too.

Look, Brazil has been mandatorily blending its petrol with ethanol since 1976. And it has successfully been able to convert 90% of the country’s light-duty vehicles into flex-fuel ones. So it sets a great example for another developing country like India.

But here’s the thing. Even if India wants to achieve 20% of ethanol blending in its fuel by 2025, it’ll need to produce 1000 crore litres of ethanol annually. But in the Ethanol Supply Year 2022-23 (ESY), which runs from December to November, we were only able to produce about half of it. So scaling that will take time as well.

So what’s the most viable option?

Yup, you guessed it. Hybrids!

Look, hybrids are a cusp between a petrol or diesel-powered engine and an electric motor. They don’t need an extensive charging infrastructure like pure EVs as they can be recharged by regenerative braking. This simply captures energy during braking to recharge the battery. They’re more environmentally friendly than EVs too, because while regular petrol cars emit 244 grams of carbon dioxide per kilometre of use (gCO eq./km), EVs emit just 187 gCO eq./km. And hybrids emit even less at 167 gCO eq./km.

So it’s a win-win. And if that’s the case why go with just a hybrid? A flex fuel hybrid EV could obviously leave a lower carbon footprint.

But could flex fuel hybrid EVs actually become the future of India’s auto industry?

Well, they could. But they’re not without their challenges either.

For starters, these vehicles won’t come cheap. Ethanol blended fuel is corrosive. And with regular use, it can damage a vehicle’s engine. That could mean more serious problems like rusting and even degradation of fuel quality. Not just that, these fuels have a lower energy, which means lower mileage and increased running costs by as much as 30%. Their supply isn’t as extensive as regular fuel either. Sure, flex fuel hybrid EVs have an electric motor to offset that. But these cars have to be engineered differently for that, leading to higher costs. So it could dampen buyer interest.

Then there’s the problem of food security. Look, as of now India’s ethanol relies on a part of the food grains coming from its central food pool. This is actually meant for distribution among underprivileged citizens. Sure, we’re scaling up ethanol production. But that cannot happen without more land. This essentially means that we’ll have to clear more land to grow ethanol producing crops. It’s called land use change and it could  result in a higher carbon footprint. You could look at the US for instance. Corn ethanol produced in the US leaves a carbon footprint at least 24% higher than regular petrol. Thanks to fertiliser and land use changes required to grow corn.

So yeah, solving these problems is something we’ll have to think of before aspiring to mass produce flex fuel hybrid EVs. Otherwise, it’s almost like coming full circle, isn’t it?

Until then…

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