Daybreak - Daybreak Special: Despite what Ola Electric may claim, China is driving the global EV movement

Episode Date: August 29, 2024

When it comes to electric vehicles, China is the crownless king. Nothing new there.But what was news to us was when Bhavish Aggarwal recently announced at an event that his company, Ola Electric, is the world’s largest electric two-wheeler manufacturer and the fourth-largest EV company in the world. It left everyone scratching their heads for a few seconds until they noticed the fine print at the bottom of the powerpoint slide — marked with an asterisk, in tiny lettering, it said excluding China.But you can't exclude China from the EV conversation because for the last decade it has been leagues ahead of the rest of the world. The Chinese government has been pushing for EV adoption — and all of its efforts have paid off. Multiple studies and surveys have found that China’s EV market is now the biggest in the world. But it's not all sunshine and rainbows. While India is still in its teething phase as far as electric mobility is concerned, China is well into its teens, and we all know puberty comes with a whole set of its own problems. In China’s case it’s price wars, record breaking insurance premiums, and a threat to data privacy. Are there lessons here for India? In this episode, we speak to two people from The Ken newsroom, who have been covering the EV space extensively — Nathan Narde and Lu Zhao. Tune in. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.Want to be part of the Daybreak community? Introduce yourself here.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first studio. episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. When it comes to electric vehicles or EVs, China is the crownless king. There's nothing new about that. But what was news to us was when Bhawishagarwal, the CEO of Ola Electric, recently announced at an event that his company, is the world's largest electric two-wheeler manufacturer

and the fourth largest EV company in the world. It left everyone scratching their heads for a few seconds. That was until they noticed the fine print at the bottom of the PowerPoint slide, marked with an asterisk in tiny lettering. It said excluding China. So we asked Nathan Narde, our reporter who covers EVs in India. Okay, so Nathan, Ola Electric is apparently the fourth largest EVs. fourth largest EV company in the world.

What do you have to say about that? Yeah, that was, that caught everyone's attention, right? And I guess if you torture data long enough will confess to anything you want to. That is true. It's like, you know, Mukesh Ambani saying that he's the richest man in the world excluding all the billionaires outside of Asia. Or Doug Daug Goh saying that they are the largest search engine excluding Google and Microsoft Bing.

It does not make any sense whatsoever. So, it was not a shocker when the meme army of the internet descended upon Ola Electric and Bhawechagarwal. Even if you look at the electric two-wheeler, which is Ola Electric's hero product, the world's top five in electric two-wheeler companies are all Chinese. If you look at four-wheelers, China is dominant there too. More than half of the four-wheelers sold in China are EVs. So forget OLA, India itself is nowhere close to China when it comes to EVs. In fact, we actually included China and fixed that chart for Mr. Bavish Agarwal. You will find it in the show notes of this episode.

And guess where Ola Electric stands in the list of top publicly traded EV companies by revenue? It's not even in the top 10. So to say that Mr. Agarwal's statement was a tall claim would be an understatement. Which is why this is a good time to talk about how China got to wear. where it is now with EVs. And to see where India stands in comparison. To begin with, as of now, China is making a new generation

of more technologically advanced electric vehicles. We're talking the next level of batteries, design, AI integration, self-driving. The thing is having had a head start, thanks to the Chinese government's concerted efforts to push EVs. The entire value chain of the EVE industry in China is just more evolved.

So, in this episode, we try to understand why China just cannot be in fine print when anybody anywhere around the world is talking about EVs. Hello and welcome to another special episode of Daybreak. I'm Snigda and I'm Rahil and every week we come together to talk about something in business and tech that interests the both of us. And it won't just be us. Depending on what we're talking about,

we will bring in a bunch of really interesting people onto the podcast. In this episode, we speak to two. people from the Ken's newsroom who have covered the EV space extensively. Nathan Nade and Lu Zhao, who's been reporting on EVs in China for the Ken. Begin by telling us what the EVE landscape in India looks like right now, how successful has EV adoption been, and who are the biggest players? So, when it comes to, like, vehicle form factors, like, take two-wheelers and three-wheelers. Three-wheelers are actually the hero story in India in terms of like EV penetration

because they've reached like 54% right now and that's like one in two electric vehicles that are sold in India in three-wheelers are electric. Compare it to like take scooters or two-wheelers where there are only like eight or nine percent of like EV penetration. OLA Electric which is the leader of that pack. although their market share has been declining. It used to have like 49% market share, I think, two years ago, and now it's at like 33%.

So the EV space for two-wheelers is split between Ola Electric, followed by TVS at around 17, Bajar almost around the same in terms of market share, and then you have the likes of Aether and very small other indigenous players. Now, switching gears and speaking about like, four-wheelers, right? The EV penetration is very low. It's like maybe three or four percent.

And the only company leading this charge is Tata Motors because they have a very clear EV-only strategy. Now, what I mean by that is it's not that they don't sell ice cars. It's that when it comes to alternative fuels, it's only EV. So in terms of four-wheelers, I think Tata has around 60 to 65% of market share, followed by, I think, Morris Garage. And then you have like Chottomotu players in India again. So right now you have companies like say a Maruti,

which is the largest company of like automobile makers in India. But they are following more of a hybrid strategy right now and they're delaying their EV launches as we speak. That's kind of what the EV landscape in India looks like today. We know that lately EVE sales in China have been dropping off. And one of the ways that companies are dealing with it is like they're pushing to expand outside of China. Can you give us a sense of where the EV market in China is at right now? Has it really become slow, slow?

Because compared to the rest of the world, China still seems pretty ahead, right? Right. Well, definitely compared to when it started maybe around 2009. Now it's like slowing down a little bit. But I would say compared to the rest of the world, it's probably still like going very strong because it's still a big country. There's still so many consumers. But from the very beginning, China has been pushing really hard to achieve its goal, right? To become greener, to have a better image in the world stage.

And I guess the subsidies, it was really important for many consumers. it was cheaper to buy an EV, so a lot of consumers just went into it. But at the end of 2022, the government stopped subsidies to individuals, which means they couldn't get the same cheap price when they were considering to buy an EV. That impacted the consumption options for many people. So I guess that's why we see the EV consumption consumption, slowing down a lot to since that. Since 2009, China's been leagues ahead of the rest of the world when it comes to EVs.

And a big reason for that is because of what Liu just mentioned. Subsidies. China subsidized electric mobility like nobody's business. EVE research and developing tech in the space was in all of the government's five-year plans. And all of that hard work eventually paid off. Multiple studies and surveys have found that China's EV market is now the biggest in the world. The country is home to more than 160 EV companies, many of which have crashed and burned because of the sheer level of competition. But this period also put a lot of Chinese

EV manufacturers on the map. Companies like BYD, Neo, Zhaunee became some of the biggest names in the EVE space in the world. But then in 2022, the Chinese government reigned in the subsidies. They believed that the EV space had gotten to a point where it could manage on its own. But once the training wheels were off, sales started slowing down. Or at least that's what all the analysts and journalists had to say. Nathan says it isn't that simple. Right. I just wanted to ask about like whenever we talk about EV sales slowing down, are we talking about like absolute numbers or like the rate of growth of sales? Because I feel like in India also like we're getting the conversation kind of wrong. Like EVs and absolute numbers

aren't declining. It's the rate of growth of the sales, which is falling down. And we're seeing this across like the vehicle form factors, be it two wheelers or four wheelers. So it's something similar playing out in China as well whether rate of growth of sales is like slowing down.

But like the absolute number of like units sold is still increasing over time. Right. Just to kind of put that in perspective, like you know, between 2021 and 2020, EV sales in China grew, from 1.3 million to 6.8 million, right?

Right. Which is massive. So, yeah, what then do we mean? By sales. That's why I feel like a lot of these headlines tend to be on the alarmist side of things and don't really reflect the ground reality because we have to also acknowledge the base factor, right? The base will keep on, the denominator will keep on increasing over time and the rate of growth won't be the same.

So, like, whenever people talk about sales slowing down, it really doesn't hit the right. note as we expect it to. It's the rate of growth in the sales which is slowing down. Right. So it's basically pretty natural for that to happen, right, as more and more people buy EVs. But Nathan, China didn't become this, you know, EVE powerhouse overnight, right? There's like a decade of work that's actually gone into it that actually led to this massive EV boom that we're seeing. Does India actually stand to gain anything from China's success? So that answer can be answered in two words. It's complicated, right? Because on one hand, I think going back last year, BYD had this proposal of setting up a manufacturing plant in India as a joint venture with mega engineering. And it was a one billion dollar proposal. The government was like, no, thank you. We don't really need your help right now. Cut to this year where Jindal Group signed a joint venture and acquired majority stake. like 51% with a Chinese-based EV maker known as the SAIC motor company,

which is commonly referred to as Morris Karaj. So on one hand, yeah, you have the government showing the door to BYD. On the other hand, you're also seeing these partnerships take fruit. But what is complicated in the sense is that we definitely do have something to gain from the Chinese dominance in this EV ecosystem, be it in terms of knowledge share at least. So the way we see it is that instead of looking at China as a BYD

and the Chinese ecosystem as a TikTok, which is like a huge threat, we should look at it as a Maruti in search for a Suzuki. Like, without which we'll still be driving Premier Padmanese today, right? So I think that kind of perception shift needs to be there in like the EV ecosystem too. On that note, Nathan, you know, China has many, many years on us as far as EVs are concerned.

But even in India, it is quite an exciting time for EVs, right? We've seen the government pushing it, like with subsidies, fame. You know, of course, terms and conditions apply. But we have seen all these new EVEs enter the market. So I'm curious to know how different India's EVE journey has been so far. Today, like, except the three-wheel of space in India, India, the EV penetration, which is basically a formula of like how many EVs are sold corresponding to the absolute number of vehicles sold. So there was a really good report in rest of world which highlighted the three wheeler figures.

It stands it's 54% today compared to like the two wheeler space and three and the four wheeler space, which is still in like 5% and 2% respectively. And the reason, like, you see, like, the three-wheelers championing the cause of EVs in India is because it makes economic sense to, like, the riders. They're not appealing to, like, their environmental consciousness. When I was speaking to, like, a investor in this company called Battery Smart, which basically makes battery swapping solutions for electric three-wheelers, he spoke about this concept called the green discount kicking in. He's like, for the rider, it's, like, lower downtime.

And, like, lower downtime and changing the battery means increased oil. earnings. Correct. Compared to, like, charging where he would spend more time charging the vehicle compared to, like, working that vehicle so he can make more earnings. That's what we see kicking in in India today, especially in the three-wheeler space. And primarily, like, if we, like, switch gears and speak about the four-wheelers. Today, there was a report in economic times that spoke about strong hybrids overtaking EV sales in the first quarter of this financial there. I think it was around 23,000 units compared like EVs being 20,000. So again, it's the same thing. There are charging concerns which are like holding consumers back.

Added to that, there's also this idea of range anxiety. But what's curious about India is that there are few states, I think right now, Uttar Pradesh being one, they're offering a discount on like buying a strong hybrid. Barring few states in India like Uttar Pradesh, we don't have like a hybrid car policy in India. What do you mean by when you say a strong hybrid? A strong hybrid is basically, if we think about it, like a hybrid is like a marriage between like a motor and like a battery. A strong hybrid is where the battery is moving the wheels more than the motor. Just like an oversimplification.

But that's basically what it comes down to. So like if we see all of the Toyota Inovas on the road and we see an identical Marathi car, that's usually the companies which are driving this forward. So that's what we're seeing in India today. like the strong hybrids are overtaking like the EVs too. So I guess our electrification journey is being a slightly more delayed compared to like other countries. And if we think about it in like a larger context, we don't have a cutoff date for like ice vehicles. Like Nathan was speaking about hybrids, right? And India, we've really taken on to hybrids like compared to EVs, right?

Right. What is the situation with hybrids in China? I actually wanted to clarify a little bit because, In China, we actually use the phrase Xingenuan, which means new energy vehicles. And that's like an umbrella term that includes EVs, hybrids. But basically, it's a bigger term. But when people talk about things like the market,

how much they're selling, they're just using new energy as a general term together. And that's sort of equivalent to EV. that's just how conversation goes. We don't really like diversifies or specifies. That's interesting. So when we talk about EV adoption in China, that also includes hybrids.

Right, right. Exactly. Oh, okay. Right. I think a point of like comparison over here is that when we talk about hybrids and countries other than in India, we're referring to strong hybrids. In India, we have the case of like mild hybrids.

Like, if we look at the lower variance, of like... The Maruti. Yeah, the Maruti cars, like a grand Vitar are the entry level cars. They're mild hybrids, where the motor is moving more of the wheels compared to, like, the battery.

Yeah. I think when we speak about hybrids in like a global context, they tend to refer to like strong hybrids compared to like, that's just like one point to like clarify over there. Got it. And also the hybrids, it also depend on the individual city's policy. Like I know in Beijing,

I don't think there are. allowed to sell hybrates versus in Shanghai, it's more popular to get a hybrid because, you know, those companies, they also have their base city. And when they're in their base city, they've got, you know, more flexibility to do with their selling and stuff. And also, because China is big, just as India, right? We have like different seasons, temperatures, weather's in different cities. So in northern In parts, people will be talking about how battery lives are not so reliable in the winters because it gets really cold and maybe they can only live up to like 50% and they have to charge very often.

But in northern part of China, for example, Beijing again, the daily commute will be quite long, maybe like longer than 40 minutes, maybe an hour and it's difficult for them to just keep it up on daily commute. Versus in Shanghai, the weather will be milder and, well, also depending on where you live, right? But the charging situation might be slightly better. It's kind of like in India, you're far more likely to see a lot of EVs on the roads in a city like Bangalore. I mean, EVV-friendly as opposed to... Infrastructure exists.

Yeah, that does make a lot of sense. Right. I feel like that's another notion which is being flipped on its head in India today, like as we speak. Because if we, we usually think of EVs to be this very modern, urban elite product. But right now we're seeing a rate of growth in tier two cities compared to like the tier one cities, the likes of a Bangalore or like a Bombay where we expect fast charging facilities to take place. Just to give you an example, like I was speaking to someone from Aether or sometime like a few weeks back. And they launched a new scooter called the Ritzstah. They were doing like a hundred units of sales in like a state like Gujarat, which only has, you can call all of their cities qualify as tier two cities.

But right now they're selling like 1,500 units. So like there's a 10x jump over there. So this is another trend we're seeing play out right now. Like they've played out most of the market in like the urban cities. And now they're seeing growth even in tier two cities in India as well. well. Two-wheelers, three-wheelers in particular. Yeah.

Not four-wheeler. Not four-wheeler. Four-wheelers are struggling in Tijuana one city. Yeah. Right. I just wanted to understand like the auto landscape in China, right? Like, is it a two-wheeler market or like a three-wheeler market? Because when we speak about India, I think there was a national family health survey which

basically said that one in two households in India has a two-wheeler. So India is predominantly like a two-wheeler market if you view it from that lens. And I just wanted to understand like what kind of. for auto market are we seeing in China? Like, what does the landscape look like? It's interesting. When you talk about two wheelers, are you talking about the motorbikes? Motorbikes and scooters included.

Like, in India, I feel like there are more, if we're talking about ice vehicles, almost 68% are motorcycles when we speak about two wheelers. They're remaining being scooters. And they qualify as two wheelers. But we can, like, include both of these when we speak about two wheelers. Right. Right. It's interesting because in different cities, again, it's a different landscape. For example, in my hometown, which is Anhui not super far from Shanghai, it's also in East China.

Over there, you will see, you know, those shared bikes, right? And in my hometown, you will also see shared scooters. However, you won't be seeing them in Shanghai. I'm not entirely sure why. I guess Shanghai, you know, it's much bigger city. People might be, or the government, it's concerned about, you know, the road safety and stuff like that. Maybe that's why they wouldn't be rolling out like shared scooters. But also, Shanghai is a very friendly city for riding scooters. So you can actually see a lot of scooters, just not shared ones, but individual, private ones, in Shanghai, let it be, you know, delivery drivers or just day-to-day commuters.

Because Shanghai is really flat. Great, right, right. And it's easier to drive that. It can be dangerous sometimes because there are too many of them. Got it. But in Beijing, because the landscape in Beijing is much bigger, much more like spread out. So just compared to Shanghai, I would say. the percentage might be lower

and then you might be seeing more cars. Like the car owner I interviewed for the article for the can, she was saying she has to get a car just because it's too far away for her for day to commute. So yeah, just to give you a sense of like different cities having different landscapes and cars, I guess. So China's EV boom has been largely, driven by four-wheelers, pun intended.

While in India's EV story, three wheelers have emerged as the unexpected night and shining armour. But more than where they've gotten, we wanted to know how they got here. With both countries, their governments had a big role to play. More on that in the next segment. So I think we've been hinting at policies through this conversation, you know, little by little,

but I kind of want to go back to 2009, right? And where China was in 2009, when the Chinese government started taking EVs so seriously, right? Of course, we all know we've been reading this in our science textbooks even here in India. China is the world's biggest carbon emitter. It produces about 33% of the world's total as of 2021. So the obvious reason would be that. But is there more at play there?

Tell us a little bit about how, you know, the conversation around EV adoption and EVs in general, EV manufacturing, how that started. in China. Right. I would see EVs have been around in China maybe since the 90s, but you're right. It's not until 2009 that the central government just decided to really push for it. I think becoming greener and having a better image in the world stage is definitely a big, big motivation behind it. and it's just a good look for the president as well, you know, President Xi. And it's also good for the economy because, you know, it's a new thing. It's hype, everyone talking about it.

And the government wrote out really nice subsidies for, you know, individual consumers and different friendly policies for people to consider it. So in the beginning for subsidies, you can get up to 12,000 R&B, which was nearly $1,800,000 plus tax breaks. And you can see that's pretty nice for consumers. And then the government also really pushed out development of technology, infrastructure. Even until now, it's giving subsidies to companies, like carmakers, and also like public use, they're also trying to push everything. Everyone is using EV cars. And now if you have like an old car similar to like what Apple is doing, you know, you can bring your own old car and then to get maybe a price cut when you buy a new EV.

And also like other policies that they're they were designed to encourage buyers. For example, the free license plates for a time. talking about it's easier to get the plate than, you know, an I-SEA vehicle. And that just encourages many people when they really need to need to use a car. And that's just an easier option to buy an EV than ICE. So like Liu said, from 2009 till 2022, which is many, many years, the Chinese government went all out. It left no stone unturned. And these were not just subsidies for consumers. The people who were buying these EVs, they were also for people manufacturing these EVs.

And hence, the explosion of EVE companies that we talked about a little while ago. In many ways, the Indian government's approach and intent was similar. Like China, India also wanted to get its carbon emissions under control and EVVs were a big part of that project. It launched several iterations of its flagship fame scheme which stands for faster adoption and manufacturing of EVs. Through the scheme, it has been subsidizing, purchasing and making of EVs in India.

Of course, terms and conditions apply. But the scale was completely different. In fact, it's not even comparable. Lou was talking about individual subsidies, right? Like subsidies being focused towards the buyers, consumers. But here in India, it's a little bit different, right? No, we have a mix of both, right? Let's just put it into larger context.

So I think there was a study done by the Centre of Strategic Studies on China by this guy called Scott Kennedy. He basically calculated the total amount of Chinese EV subsidies. And the figure stands at $231 billion over 15 years. Now, let's put it into context with India, which started in 2015, 529 crore for Fame 1. And take 11,000 crore in Fame 2, even counting. the stopgap figures. So like that's...

This is in rupees. Yeah, rupees. So like it just comes up to like 1.5 billion dollars. Okay. So we can see the fractional percentage it is compared to like China. And at the same time we have another subsidy known as a PLI subsidy. Now these focus on the auto makers where they get benefited from like a subsidy given by the government and not the end consumer.

So how fame works is basically. again, it's a little convoluted because it's not a direct transfer payment. So like, if I'm buying a OLA scooter today, I'll buy it at a subsidized cost. Now, OLA has to go to a government agency

and get that money. And I had covered a story last year, which basically said that for months on end, almost 100, 200 crores were like waiting in payments for them. And that always hits their supply chain. Obviously, Ola has a deeper pocket

so they can weather that storm. But you compare it to the likes of like an ather which does not have deeper pockets. It affects all of their operations that are captured in that story as well. So it works a little differently in India. Right. So this is also where the whole

fame controversy happened, right? Like where EV companies in India, they were getting parts from other countries and then they were, you know, taking advantage of all these subsidies that the government had come up with, which was, which were meant for, companies that were manufacturing in India.

What's interesting is the role of this institution known as IFCI. So, IFCI was basically brought in when EV companies were violating the localization norms. So to avail the fame subsidy, you had to prove that, okay, 50% of my supply chain is localized. Now, EVE companies, the likes of, like, Hero, Okinawa, there were a few others as well. they were caught with their hand in the cookie jar. Like, okay, you guys violated this and now you have to pay a fine to this tune or just return the subsidy.

Then at the same hand, Ola and Ather were accused of something else. They were accused of inflating their upfront cost because they were selling chargers separately. So it's a little different. Everyone's accused of misusing the funds but on different counts. So it's a little confusing.

But the role of IFCI is interesting. So like Nathan said, there are government subsidies. in place. It's been a couple years and two iterations of fame and people have already figured out how to game the system, particularly when it comes to localisation. That's the unfortunate flip side of the global EV boom. Unfortunately, that's also just the tip of the iceberg. We are still in the teething phase of our EV journey, but China has entered its teens. And we all know puberty comes with a whole set of its own problems. In China's case,

it is price wars, record-breaking insurance premiums, and a threat to data privacy. But it's all worth it in the end if it's good for the environment, right? Well, maybe not. More on that in the next segment. So, you know, the whole idea of switching to EVs is basically because we're doing it for the environment, right? We feel so good about it. Evis are being sold as the clean option for transport. Like, for example, China, which is one of the or the biggest.

emitter of a carbon dioxide in the world, if I'm not wrong. So that it has become the leader of the whole switch to EVs for the rest of the world. That makes sense, right? India too is actually, by the way, right up there after China when it comes to CO2 emissions. So Nathan tell us, are EVs actually tangibly helping us towards our goal for a better and more sustainable environment? The sad answer is it depends on who you ask. Yeah. So it depends on also how you calculate it, right?

Because if you speak to some think tank that's based out in the USA, they'll talk about tailpipe emissions when it comes to EVs. And they'll be like, okay, EVs are the cleanest option out there compared to someone that's in Japan, which is on the forefront of hybrid production, right? They'll calculate it in a different front. It's a cradle to grave index where they'll also talk about, okay, how is the charger being built?

How is the cell being developed? All of these processes require coal burning. Correct. So if you calculate all of these emissions at a life cycle range, you may come to the conclusion, okay, hybrids may be the better option for this point of time until then we need to like put EVs on pause and we'll sell hybrids and buy hybrids for now. So that also is up for debate. The sad answer is like it really depends on who you ask. So we were talking about pollution, right? and, you know, EVs and their contribution to sustainability and a better environment and all of that.

And whether that is, how much of that is true. And Nathan was talking about, you know, long-term effects and like short-term gains, right? So I was asking you about, you know, China because we've all seen those pictures of cities in China, like super polluted, thick smog, all of that. And it's quite familiar to us. You know, it's the same story here in Delhi and other big cities. as well. So did EV adoption in China actually help bring down pollution? That's a great question. I guess there's so many different factors, right? Evie is not the only thing that China is doing to try to become greener. It's also taking other steps to becoming that. And it's difficult to say if

EV adoption is helping directly. And I guess there's also a debate. globally whether EVs are actually grain or actually good for the environment. But I guess like Nathan said, it's just what everyone is doing. And you just have to get on this track. But I would say in general, pollution has been going less. I mean, the environment has been becoming better in recent years, especially, I guess, after, you know, the Beijing Olympics. And China just wants to maintain that.

image. So it's trying to do different things to make that happen. And, but also in different parts of China, like in north and west parts, they have more industries that just produce more pollution. And also the landscape, like the west part of China, you've got desert. And then in some weather, it just can become horrendous for other parts of the China as well. you can see, you know, the sky just becomes yellow all of sudden for days, for weeks even. But yeah, in general, I would say it's going. The government is doing a lot of things that it can. But how close we're getting to his goal, I guess it's still, there is still a long way to go.

And while we're on the subject, there is this study that Nature, that was published in Nature magazine recently, that was actually looking at the impact that EV's electric mobility in general has had on AQI levels in like big Chinese cities. So Beijing, Shanghai. And they found that there was a decrease in EQI with, you know, in cities where there was increased frequency of private EV vehicles. But in Beijing and Shanghai where power generation is still coal-based. the study found that there was an increase in nitrogen dioxide concentrations, right? And that's potentially linked to the sort of electricity consumption that one would associate with EVs. But on the whole, the study did find that there is a notable kind of carbon reduction effect and, like, therefore a substantial reduction in emissions as well. But coming back to what Nathan said, depends on which study who's doing it. Yeah. Exactly. Exactly. It's all biased.

Yeah. So like, I feel like, I feel like. it's not just think tanks that are privy to this. Like, we can see it, like in the Indian context at least. You can see it literally translate into a word of words between the major automakers as well. Just to give you like a flavor of that is that in May, during Tata Motors' earning call, the chief financial officer dismissed hybrids as a tax break tool,

which is quite something. He just dismissed it. At the same time, like, I think a few weeks before that, Maruti Chairman R.C. Bhargava, he went out to say that hybrids are less polluting than EVs because 76% of like EV generation comes from coal. So like what we're seeing play out and like Maruti is driving the hybrid sales in India with a marriage of convenience with Toyota. So we're seeing it play out even like the company's point of view. And this will just intensify over time. Like now Marathi obviously will announce its EV plans. But, you know,

You can see this debate and contention between the companies as well right now. Yeah. But whether or not it is good for the environment, when it comes to consumers, price is what matters the most, especially here in India. So when people look for the perfect EV, they're usually not thinking about which model is best for the environment, right?

Instead, they're actually thinking about which model gives them the best range, which has the best features and, you know, and which has the best price. So, luckily for them, there are plenty of options available in the market. But in China, that comes at a price. Right, Lou, China's in this very interesting place in its EV journey. You have more than hundreds of brands popping up left, right and center. Brands are being launched and they're also failing at this breakneck speed. Now, an unfortunate byproduct of all of that is this very aggressive price war that we're seeing, right?

we're seeing companies slash costs really significantly almost overnight. That must put consumers in a pretty precarious place, right? That's totally right. Actually, I think that's given a lot of consumers just estimate, but they go into EV because not just the price war, or not just like the price, but also different models. Because companies, they're just trying to push out, new models, new updates as soon as possible. And that not only adds on to the price war and also

makes consumers just concerned, you know, are they actually safe? Are they being tested, tested? And also they wonder if they can buy cheaper ones. So I think that also, you know, makes the growth rate of EV adoption kind of slowing down a little bit, even though the whole market is still like on the hype, there's still so many new stuff coming out. But people will be a little bit hesitant because they're not really sure what to believe and whatnot. Lou, you know, you just mentioned concerns about safety when it comes to EVIs.

We have seen so many accidents happen in China. and even in India there have been many cases like we've all heard about the stories of EV scooters suddenly bursting into flames and that brings me to EV insurances right and Lou you did a fantastic story about how EV insurance in China is getting more and more expensive

so tell us about that but before we get there Nathan can you tell us what is happening with EV insurance in India like we know that the market is not as evolved as China right now, right? Right. So whenever I spoke to anyone that's working in like the EV financing space,

they always just pointed out, okay, the market is nascent. And this has been going on since like mid-20203. Like for the market to grow, you need to have like a resale value of EVs, which we're not really seeing right now. And that's why we're not seeing it take off as I guess we're seeing a takeoff in China. But that has to do with the penetration rates as well. in India because like the four wheeler penetration rate standard like two to three percent right now. So yeah.

And Lou, do you want to now give us a sense of what's happening in China vis-a-vis like EV insurance? Right. So actually EVs, they were using the same standard as ICE cars as in insurances for a very long time up until 2021. and then that's the point we've got specialized EV insurance, I mean, commercial ones. So you've got insurances that will be covering, you know, the batteries or like the parts specifically only to EVs. And since then, the market has just gone up quickly. And now, apart from those.

you know, ones you have to buy to get into, get on the road. There are other commercial ones you can just choose to buy or whatnot. But the insurance market is a little bit tricky here in China that there are so many different products and the price isn't cheap, honestly. Just based on the conversation, I talked to like insurers and also car owners. plus the insurance, the total cost might be similar to purchase an ice car. And that's also making people like, you know, questioning if that's actually worthwhile to buy a car. Because when it comes down to consumers, they concern more about the cost than environment. Let's be

honest. And then when we talk to insurers, even though the insurance is higher, but they're still losing money because it's so cost, it's so costly to cover a EV car. They're more likely to get into a car accident and then when they do the cost to change, to fix any parts

of an EV, it just costs more money than doing a traditional car. Right, but all things considered, China still light years ahead of everyone else, right? So even if the market is slowing down there, no one is even close to where China is right now. So what I want to understand is what the main factors are that have actually gotten China to where it is now with EVs. Right. I feel like the central government

has definitely done a lot. And, you know, in China, I think the power of a central government, it's just incomparable to many other countries when the central government sets its mind to something it also goes down to local governments, neighborhoods, communities, goes down to individuals and they've got to go.

They've got a task to do. That's just their job. If they don't do it, they might lose their job, they might, you know, face other things. So they really sets their minds to it. And also because there's also a race between different tech companies or car owners. There's so many different companies that they're trying to get on top of each other.

And that race, I guess, also push companies to do like different models, advancements, technologies. And even like Xiaomi, right, because it's already got so far in the smartphone market. it's also like overseas everywhere, right? So now it's trying to see, oh, where else can we go? And EV market is like the next for them. It's difficult to say if they can actually go far in the EV market because it's also like very competitive. But basically that's like the whole environment in China.

It's just very competitive and everyone's going really fast. Daybreak is produced from the newsroom of the Ken, India's first, subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by Rahal Philipos and I, Sinkda Sharma, and it was edited by Rajiv Sien.

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