In today’s Finshots, we try to answer the question on everyone’s mind — are electric vehicles the answer to saving the planet?
The Story
There are only a couple of reasons why you might buy an electric vehicle.
- Environment! You see ads about ‘zero emissions’ and you want to play your part in keeping the world clean and green. You don’t want to burn fossil fuels just to get from Point A to B.
- Long-term cost! You think you can justify the high cost of an EV because you’ll spend less money on fuel over its lifetime. And you see the government doling out subsidies so you know it’s the future. You don’t want to be stuck trying to sell a diesel car in 10 years when the world has moved on.
Now carmakers in India know that most people are thinking along these lines nowadays. So they’re cutting back on the number of petrol and diesel-powered models or what’s known as the internal combustion engine (ICE). In 2018, they sold 168 such models. But that has now fallen to just 136. On the other hand, they’ve stepped up the EV game. The EV models have jumped from just 3 to 18 during this same period.
But what if we told you that there’s a small problem with EVs in their current state?
They aren’t the best. Not for the environment. Not for your pocket.
If you’re shocked, then we suggest that you take it up with the folks at the Indian Institute of Technology, Kanpur. Because their researchers crunched the numbers, ran a lot of permutations and combinations and finally said, “Guess what? The future should be hybrid. Not electric!”
Yup, it seems like cars that have an electric battery but also come fitted with an internal combustion engine (ICE) that uses fossil fuels are simply better. For the environment and for your pocket. At least from an Indian context.
And what did they find you ask?
So they ran some simulations assuming that the cars have a life of 10 years. And that they run for 20,000 km a year. They then calculated the emissions through the entire life cycle or what’s known as cradle-to-grave — which means right from production to maintenance and then recycling.
And the numbers speak for themselves.
The EV emits 187 grams of carbon dioxide per kilometre of use (gCO eq./km). The hybrid is at 167 gCO eq./km. The regular petrol car emits 244 gCO eq./km.
And if you’re wondering which cars were used in this analysis, it’s the petrol and electric variants of the Tata Nexon and the Maruti Suzuki’s hybrid Grand Vitara.
And if you’re wondering why EVs aren’t coming out trumps, remember, emissions aren’t just about what comes out of the tailpipes alone. In that case, EVs don’t emit anything and they’re a clear winner. But think how the massive batteries that power these cars are produced. They require a lot of nickel, cobalt, and lithium. And mining and refining them emit a lot of greenhouse gases. So producing an EV can actually be quite counterproductive at the moment.
That means if you decide to change your EV after driving it for say 30,000 km, you might have just bought a regular petrol car instead.
Another big factor over the lifetime is the electricity needed for charging EVs. In India, we’re still quite heavily reliant on thermal power for our needs — 80% of it comes from burning coal. So each time you juice up your EV, you burn a little bit more coal giving way to increased CO2 emissions.
Hybrids like the Grand Vitara on the other hand use a much smaller battery. That means it needs fewer scarce metals. And in the end, the emissions from mining and processing also drop. And it doesn’t even need to be plugged into a power source to charge because the battery is also charged whenever the car’s brakes are applied. And by using a combination of the electric battery and the regular engine, it can help boost the mileage.
Not to forget that India has increasingly been adding ethanol (derived from sugarcane) into its fuel. And as per the paper, this blended fuel succeeds in bringing down the emissions by quite a bit too.
So yeah, hybrids simply seem to be better for the environment right now.
Oh, and the cost aspect?
Now there are quite a few things to consider here — the initial price of the car, the annual maintenance charges, the fuel or electricity cost for running it…you get the drift. But there are two scenarios to consider.
In the first case, we have to deal with the subsidies that the government has been doling out for EVs. Naturally, this is an added boost just to make the pricing more palatable. So once you consider this and the non-existent fuel costs, you’d think that over a 10-year period running 20,000 km a year, the EV would win, right?
Not quite. It seems that the Total Cost of Ownership (TCO) per km is around ₹13 for both an electric and a petrol-powered vehicle. Whereas it’s ₹14 for the hybrid version.
But what if the government chooses to give hybrids a similar incentive after seeing the impact on emissions?
Well, then the hybrid emerges as the clear winner. Its TCO falls to just ₹11 per km.
That’s quite something, isn’t it?
Anyway, bear in mind that no analysis is going to be perfect.
We might suddenly unearth those rare metals and be able to mine them more efficiently. We might see a complete overhaul of our energy mix and we might generate more electricity using wind or solar. All this might cut costs drastically. On the other hand, the price of petrol might shoot up significantly and these calculations may not pan out exactly as the researchers envisioned.
But at least as of now, the research paper suggests that hybrids are the winner in the battle to cut emissions. And if you convince people of the lower ownership costs, it could accelerate its demand too.
So will this paper shake up the established order?
We don’t know. But it’ll be quite interesting to see what happens because currently hybrid vehicles are treated as the stepchild of the automotive industry. Just look at how we’re taxing hybrid vehicles. EVs are taxed at 5% whereas large hybrids attract 43% GST. That alone could dissuade people from buying these vehicles. And maybe that’s why only 4% of all cars sold in India in FY22 were hybrids.
But the voices in support of hybrids are growing. India’s top carmaker Maruti Suzuki said last year that if we want people to ditch ICEs and cut back emissions, we need to give them affordable hybrid alternatives first. And now we have one of the top engineering schools in India pitching for hybrids too.
So will the government listen? Well, we will just have to wait and watch.
Until then…
Don't forget to share this article on WhatsApp, LinkedIn and Twitter
Also, we are doing something slightly different with the Ditto Insurance Plug today. Instead of just asking you to book a call, we will be attaching this guide to understand Term Insurance. Think of it as a Term Insurance 101. If you've never understood what the fuss is with this product, then we are sure this explainer will set the record straight.
