The future is electric, once again

They are not just in the zeitgeist, but, increasingly, in our everyday lives too, as we find them whizzing past on the roads with green registration plates, making the familiar low-pitched humming sound. These are electric vehicles – cars, bikes, scooters, hauling three-wheelers, and even garbage collection carts.

But you might be surprised to know that this is not the first time electric vehicles (EVs) have gained in popularity. They were quite the rage more than 100 years ago in the early 1900s, with EVs constituting over a third of all vehicles sold in the United States. A timeline by the U.S. Department of Energy (DoE) dates back the prototypes of the EVs to developments in the 1820s with the invention of the electric motor by the Hungarian engineer Ányos István Jedlik and other technological breakthroughs in the U.S., Netherlands, and Hungary. The first form of an EV was a “crude electric carriage” developed almost 200 years ago in 1832, by a Scotsman - Robert Anderson.

However renewed interest in EVs had to wait until the widespread adoption of electricity across cities in the U.S. and Western Europe in the late 19th and early 20th centuries. EVs began sprouting across the Atlantic during this time. While William Morrison, an American chemist created what was a “little more than an electric wagon” in the 1890s, Ferdinand Porsche, who went on to form the iconic German sports car company by the same name, developed an electric car called the Egger-Lohner C.2 Phaeton in 1898. “The vehicle was powered by an octagonal electric motor, and with three to five PS it reached a top speed of 25 km/h,” states an article on the company’s website. Incidentally, Porche also designed the world’s first petrol-electric hybrid in 1900. The production-ready version of the vehicle was called the Mixte.

There are similarities in the reasons for the rise of EVs between now and then — the initial internal combustion engines (ICE) were noisy and polluting. They were difficult to drive, requiring the operation of a manual crank to power them on. Changing gears was not as smooth as they are today. This is why the early EVs became especially popular with women. A January 20, 1911, a New York Times article states, “Ever since the small electric runabouts were introduced, about ten years ago, they have always been popular with women. In the early days of motoring, the little electrics were about the only kind of motor car a woman could handle easily, as the early gasoline cars required more strength to crank than most women possess.” The Times went on to say that “the designers of the electric passenger carrying vehicles have made great advances in the past few years, and these machines have retained all their early popularity and are steadily growing in favour with both men and women.”

But three years before this article was published, Henry Ford had introduced the mass-produced Model T. By 1912, the petrol Model T car cost $650, while an electric sold for almost three times the price at $1,750. This and the electric starter, which did away with the hand crank, and the discovery of crude oil in Texas in the 1920s, leading to petrol refill stations coming up across rural Europe and America, pretty much put paid to the early EVs by 1935.

Cleaner choice

Some similarities between the rise of early EVs and those on the roads now remain. EVs continue to be easier to drive, and they do not pollute, while even the cleanest of ICE vehicles emit particulate matter. Moreover, the correlation between vehicle emissions that contribute to the formation of greenhouse gases, which in turn leads to global warming, drove technological advancements in EVs., mainly to address what limited their uptake in the early days – the inability to attain higher speeds and the modest range of the battery motor, allowing only for short trips within urban settings.

According to the Paris-based International Energy Agency (IEA), the transport sector accounted for almost a quarter (23%) of global energy-related carbon dioxide (CO2) emissions, making this sector the third biggest contributor to climate change after energy and industries. Of this, 75% of emissions were from road transport, and passenger cars alone accounted for almost half, that is 45% of total transport emissions in 2023. While aviation emissions were the next big chunk, they were way behind road transport at 11%, shipping was at another 10% and rail constituted the lowest at just 4%.

“Transport emissions grew at an annual average rate of 1.7% from 1990 to 2022, faster than any other end-use sector except for industry (which also grew at around 1.7%). To get on track with the Net Zero Emissions (NZE) by 2050 scenario, CO2 emissions from the transport sector must fall by more than 3% per year to 2030,” wagered the IEA in its Tracking Transport 2024 report. The IEA also highlighted the soaring uptake of ICE SUVs as an impediment to achieving the NZE goal, accounting for 46% of global sales and almost a third (31.4%) of total car emissions in 2022, compared with just 8.5% in 2010.

Aside from the now well-documented detrimental health-related consequences from vehicular pollution, many other reasons have propelled the resurgence in the popularity of EVs. Governments have introduced policies in the past decade that have supported the growth of the EV sector. In India, the government introduced the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles, or FAME, in April 2015, with an outlay of ₹895 crore for five years. This allocation was increased more than ten times to ₹10,000 crore in the policy’s second iteration, FAME 2, between 2019 and 2024. While the policy intended to provide capital support to encourage the creation of a manufacturing ecosystem for EVs, a substantial subsidy to the buyer of an EV ended up being widely popular, leading to greater EV uptake, with calls for a third iteration of the scheme.

Technological disruption

It was a similar EV adoption scheme that led to Tesla receiving a $460 million loan from the U.S. DoE in 2010, that helped the then EV start-up build its manufacturing facility in California. And it was Telsa’s 2006 unveiling of a luxury electric sports car – the Roadster, with a range between 320 km and 390 km on a single battery charge that led to a resurgence in EVs’ popularity. The Roadster addressed what had come to be called “range anxiety” in common parlance. That is, the anxiety that one faces when they fear becoming immobile as the battery drains out without the facility to recharge on the go. The Roadster also had better pick-up than any of its ICE rivals with a range of 0-95 km in under four seconds.

The COVID-19-induced crippling of supply chains was another factor that helped propel EVs’ popularity, with all forms of transport coming to a grinding halt and global oil giants forced to stop pumping out crude. Countries like India, which imports more than 80% of its oil requirements took advantage of the rock-bottom crude prices - $20 a barrel in April 2020 - and stocked up its Strategic Petroleum Reserves and expanded domestic storage capacities. But the realisation that this disruption was a potential threat to energy security was not lost on any nation and led to a spurt in EV technology-related innovations globally.

The past 10 years have seen advancements in battery technology at break-neck speed. These advancements have significantly addressed most of the limitations to EV adoption, such as the distance one could travel on a single battery charge known as energy density; the life cycle of a battery; its charging speed, thermal stability, and most importantly, cost. The technology that has emerged as the mainstay now is Lithium Iron Phosphate (LFP), as it is cheaper, safer and more thermally stable than the others in the market.

While Telsa had a head start with the use of Japanese electronics giant Panasonic-manufactured lithium-ion cells for the Roadster in 2006, the company has largely switched to LFP batteries in the past five years, made by the Chinese behemoth CATL. Lithium-ion batteries power our everyday gadgets such as phones, laptops and earphones. They are mass-produced, cost-effective, compact and durable, and largely offer thermal stability, meaning the heat radiated while charging or being used can be controlled. But LFP’s energy density, and propulsion speed, which are valuable features in an EV, have far outstripped Lithium-ion’s use case.

Other battery technologies include a combination of Nickel-Cobalt-Manganese (NCM), or Nickel-Cobalt-Aluminium (NCA) that have double the energy density of LFPs. However, they have a shorter lifecycle and are more prone to overheating than LFPs. While NCMs can charge faster, they are also twice as expensive as LFPs as the resources required to make them are not as abundant. But NCM/NCA batteries are being mass-produced by group companies of the South Korean electronics giants Samsung and LG.

Aside from these battery technologies that are widely in use, there is ongoing research on what are called solid-state batteries that hold great promise on several parameters and could potentially upend the EV market, but it is still at the pilot stage. Panasonic and Japanese automobile giant Toyota are leading the research on these.

Chinese dominance

The two leading companies that make proprietary LFP batteries worldwide are both Chinese. Contemporary Amperex Technology Co. Ltd (CATL), and BYD – the EV behemoth that outnumbered Tesla in global sales in the past year. Both these firms have emerged not just as battery powerhouses, but energy technology giants, leading research and innovation in material, grid-scale energy storage systems, battery swapping, recycling and second-life applications, and have heavily invested in lithium mining and refining.

Recently, BYD revealed its Super E-platform charging facility that can charge an EV battery in five minutes to achieve a 470-km range. This pits EVs in direct competition with gasoline vehicles and could aid in widening BYD’s market share lead against Tesla. Auto trend trackers report Tesla sold 1.78 million units worldwide giving it a 10.3% market share in 2024, while BYD had more than double that at 22.2%, with 3.84 million units sold in the same period.

These innovations have led China to become an EV battery manufacturing powerhouse. In a research paper published in early March, the IEA states that “over 70% of all EV batteries ever manufactured were produced in China, creating extensive manufacturing know-how.” China has not only captured the overwhelming chunk of the EV battery market share, but its vertically integrated manufacturing ecosystem means that it also controls 70-90% of the value chain of EV batteries, which include mining and refining.

The high levels of investments in refining and mining in the past five years have led to an overcapacity of critical minerals. The global supply of cobalt, nickel and lithium exceeded demand by 6.5%, 8% and 10% respectively in 2023. This also led to a steep decline in battery prices. In 2024, the EV’s most expensive component, the battery, roughly cost $100/kWh compared with $1200/kWh in 2010. This has begun making EVs cheaper than ICE vehicles across China, and this cost arbitrage is being passed on globally, as EV makers worldwide adapt Chinese-made LFP batteries. CATL alone holds about 38%, of the global EV battery market share, while BYD holds another 17%.

It would be no exaggeration to state that China has been singularly responsible for ushering in an EV revolution in the automobile industry in the past five years, leading to global penetration of electric cars rising from 4% in 2020 to 18% in 2023, with sales crossing about 17 million in 2024 - a 25% rise from 14 million sold in the previous year. Of the 17 million, China alone accounted for the sale of 10.1 million electric cars, followed by Europe with 3.4 million, the U.S. with 1.7 million, and the rest of the world accounting for the remainder.

While Norway leads EV deployment with electric car sales reaching 93% in 2023, the China Passenger Car Association noted that EVs and hybrids crossed 50% of all vehicle sales for the first time in July 2024. Electric cars in India, on the other hand, accounted for only 2% of total sales, despite hatchback and sedan versions of EVs offered by Tata Motors and MG being priced competitively compared with ICE variations. This is largely influenced by range anxiety and the consumer’s desire to see charging infrastructure expansion on the ground.

India’s position

However, electric two-and-three-wheelers (e2w and e3w) have witnessed significant growth in India, with 1.2 million e2w sold in 2024, accounting for 60% total EV sales and representing a 30% year-on-year (YoY) growth from 2023. E3Ws which largely encompass commercial vehicles have witnessed even more impressive growth with the Society for Indian Automobile Manufacturers reporting an 18% YoY from 2023, to reach a market share that has crossed the half-way mark at 54.3% in 2024.

India’s EV policy emphasises the electrification of public transport and mobility, as passenger car sales do not yet constitute the per capita volumes witnessed in industrialised countries including China.

At the Bharat Mobility Global Expo held in Delhi in January this year, almost a third of more than 90 models unveiled were EVs, ranging from luxury e-SUVs to e-trucks, and even electric ambulances. Not surprisingly, e-SUVs were showstoppers, led by Chinese brands BYD’s Sealion 7 and its rival MG Motor’s Cyberster.

There was a frenzy of legacy automakers wanting to rush in with their EV offerings. The late entrant Maruti Suzuki unveiled e-Vitara and Hyundai released Creta Electric, its e-version of the popular SUV Creta. Speaking to reporters, MSIL’s MD and CEO Hisachi Takeuchi emphasised, the ‘newness’ of the e-Vitara. He said, “This is not just changing the ICE with a battery and a motor, from the ground up, this (e-Vitara) is all new.”

Prime Minister Narendra Modi, who inaugurated the Bharat Expo, wagered EV numbers in India would increase eight-fold by 2030. He emphasised the government’s intent to procure about 14,000 e-buses by the end of fiscal 2026 through an EV support scheme called PM E-DRIVE. The scheme is the third iteration of FAME, but with an expanded scope to support the entire gamut of transport electrification – ranging from e-rickshaws to e-trucks; and enhancing charging infrastructure.

At least five Indian States have made budgetary allocations to add e-buses to their transport fleets. The Bangalore Metropolitan Transport Corporation has inducted 1,027 buses with plans to scale e-buses in Bengaluru alone to 9,000 by the end of the next fiscal. Telangana’s State Road Transport Corporation operates 254 e-buses in Hyderabad with plans to double it by mid this year.

Based on current policies and trends, the IEA estimates that the EV revolution will offset about 6 million barrels of oil a day by 2030, which is just a fraction of the 103 million barrels produced per day as of March 2025, but enough to signal the beginning of the end of the oil era.

Changing landscape

Make no mistake, this is not just a technological shift toward decarbonising transport, but a social, cultural, economic, environmental and geopolitical transformation of the global transport landscape as we know it. It is arguably akin to the transformation that was witnessed across industrialised nations after the Second World War, only this time, it appears, this revolution would be led by Asian countries.

The signs are already visible. On March 12, Europe’s largest battery maker, the Sweden-based Northvolt filed for bankruptcy, as it struggled to compete against cheaper batteries from China. Batteries in China were cheaper than those produced in Europe and North America by over 30% and 20% respectively. This marks a setback for Europe to develop its own battery technology. More crucially, this means, Europe and the U.S. would likely not lead in global standard setting on EV battery technology. With European companies failing, and the EU’s general wariness towards China, Korean and Japanese makers, who have traditionally been the largest manufacturers of NCM batteries in Europe, are investing in making LFP batteries as well to compete against their Chinese counterparts. The IEA states that Korean firms lead overseas manufacturing capacity with nearly 400 GWh of the 3 terawatt-hour (TWh) global capacity in 2024, followed by a distant Japan at 60 GWh and China with another 30 GWh. Korean and Japanese firms also lead research and innovation on solid-state batteries.

Europe’s celebrated automobile industry is on the edge of a precipice, as demand for its cars in its largest market, China, has fallen precipitously. The overall market share of foreign auto brands in China fell to a record low of 37% just in the first eight months of 2024 from 64% in 2020, signalling a drastic shift in customer preferences. Global sales of German brands of the BMW and Volkswagen Groups, long viewed, not only as technological marvels but as a status symbol, fell by 13.4% and 11% respectively in 2024. Mercedes-Benz saw a 7% decline, while the luxury car Bentley lost 37% in its operating profit mainly on account of declining demand in China.

A direct correlation could be made with the rise of local brands from BYD, Geely and State-owned SAIC, and a shift to EVs as they become cheaper than ICE vehicles in China. Nearly 60% of all vehicular registrations in China were EVs in 2023. But this decline is not only in China. European ICE carmakers lost ground to Chinese EVs even in their home markets. Europe accounted for 25% of electric car sales in 2023. This led to the EU slapping import tariffs in early October last year. The tariffs could go up to 35.3% over and above a flat 10% customs duty for China-made EVs entering the 27-member nation block. The EU termed these duties as “anti-subsidy” tariffs, claiming China’s state support for its EV sector has defied the competitive logic of the industry globally.

The response from China speaks volumes about who today leads the global auto technology race. China initiated a similar anti-subsidy investigation into imports of European brandy, dairy and pork products, President Xi Jinping declined an invitation to attend a summit in Brussels to mark the 50th anniversary of EU-China relations and has formally complained to the World Trade Organisation, alleging the EU’s tariffs violate the global trade body’s rules and constitute protectionism. It does feel a bit like deja vu, doesn’t it? Well, that is because in the 1980s and 90s, industrialised nations railed against what they alleged were protectionist measures across poorer countries, which they claimed, denied those citizens access to superior technology from the developed world. It was a cloak to expand beyond their saturated home markets. The most apparent change on the ground following the lifting of import barriers and local manufacturing rules was the flood of American and European consumer durables and automobiles that upended domestic companies across the developing world.

Taking the hit

There have been planned plant closures across Europe’s auto sector, something that was unthinkable even about a decade ago. Stellantis, the amalgamated Dutch-headquartered company that owns iconic brands like Vauxhall, Opel and Peugeot, has planned closures that will cut jobs in Italy and France amid a 70% decline in profits in 2024.

Volkswagen had three weeks of labour unrest across nine plants in Germany in December last year, following proposed wage cuts and factory closure threats – the first in the firm’s 87-year history. It was resolved on December 20, 2024, with workers agreeing to modifications in staff bonuses, capacity reductions at five factories by 7,34,000 units annually and a planned 35,000 decrease in jobs by 2030 through retirements and voluntary redundancies.

One of the major economic disruptions that is expected with the rise of EVs is the significant reduction in jobs across the automotive sector, as the EV powertrain requires only 20 moving parts compared with 2,000 for ICE vehicles. A World Resources Institute, India, report estimates that this would mean a reduction in the share of the component suppliers in the value chain ranging between 15-20%. While the auto cluster suppliers, The Hindu spoke to, view this with some trepidation, they also wager that in the long term, the hit may not be as bad, as the transition, at least in India, would mean a growth of both the EV and ICE sectors as per capita vehicle ownership will continue to rise for some time to come.

The Europeans, however, have made a more sobering assessment. A study by the European Association of Automotive Suppliers (CLEPA) forecasts that the shift to EVs could result in a net loss of approximately 2,75,000 jobs by 2040 within the EU automotive sector. This projection accounts for the elimination of roles related to ICE powertrains, partially offset by new positions in EV manufacturing. While the U.S.-based United Auto Workers union has expressed concern about job losses due to the rapid adoption of EVs.

A few more characteristics of the EV powertrain are the high degree of vertical integration, automation and digitisation by automakers. This has also led to a skill gap between those that are required on the EV powertrain, and its ICE counterpart. These roles include coders, EV software managers and cloud engineers – positions that typically require higher education degrees, which have fewer requirements on ICE powertrains.

Environmental impact

Several other shifts have been understudied, as EV advocates have placed greater emphasis on the transition to electrification to meet global climate goals while side-stepping its environmental and social impact. While EVs aid reduction of carbon emissions during operation, the mineral extraction process for their batteries has shown to be severely detrimental. Chile’s Atacama Desert – the vast water-scarce and sparsely populated fragile ecosystem, is being mined for lithium through the evaporation of brines found beneath the salt flats. Chile is the second largest producer of lithium, the key component of the LFP batteries. “Miners pump salty lithium-containing water, called brine, into massive ponds, where it can take years for the evaporation process to separate the lithium. The technique drains already scarce water resources, damages wetlands, and harms communities,” reports the Natural Resources Defence Council. This has led communities that live in the Atacama to lose their access to potable water and instead rely on tankers to deliver it.

While in the Democratic Republic of Congo, where more than 50% of the world’s cobalt reserves are found, child labour is rampant. The U.S. Department of Labour (DoL) reports, “Children routinely work in these mines, often under hazardous conditions. While mining is on the DRC’s list of hazardous activities for which children’s work is forbidden, the majority of cobalt mining in the DRC is done informally, where monitoring and enforcement are poor.” The DoL goes on to state that 5,346 children were registered in a Child Labour Monitoring and Remediation System database that has now been handed over to the DRC’s Ministry of Mines. Aside from rampant child labour, cobalt mining has also polluted local water resources, affecting the communities that depend on them.

The International Union for Conservation of Nature (IUCN) Netherlands has reported that Indonesia’s nickel boom, where the world’s largest reserve of the metal is found, has led to deforestation, pollution, and loss of livelihoods for local communities, particularly in the islands of Sulawesi and the Moluccas.

In the end, we can safely say that no transition to a new technology has been without its detrimental impacts. But as we increasingly realise the finite nature of the world’s resources to support humanity, some transitions could be done so, with greater deliberations on ensuring the least all round damage, especially when it is being done on the premise of saving life on Earth from the disastrous impact of climate change. It is also safe to say, that this time, the electrification of transport is here to stay.