Paying firms to play has a checkered history in India:
Favored companies invariably ask for the protectionist cover. But with crude oil at $120 a barrel, this particular gamble has some merit. Consumers are already shelling out too much at the pump because of high domestic taxes on gasoline and diesel. However, cutting the levies will only make the government's pandemic-strained budget creak and groan. Hence, the desperate policy pushes for EVs. There's another goal behind giving money to battery makers, something that can't be articulated in a government press release. The idea is to keep the nascent EV adoption as far away from Chinese technology and raw materials as possible so that India's hydrocarbon dependence doesn't metastasize into a different kind of geopolitical liability in the future. "Today 90% of global capacity is in China," Ola Electric founder said on Twitter after winning state support. "We will reverse that and make India a global hub for EVs and cell tech." That's a lot of chutzpah for a startup valued at $5 billion, based on its last $200 million funding round in January. Ola Electric, backed by SoftBank Group Corp. and Tiger Global Management, is tiny compared with Reliance, which is 45-times bigger in public markets. The conglomerate is controlled by Mukesh Ambani, Asia's richest man, who also owns the world's largest oil refining complex. Yet, New Delhi is backing the lesser-known newbie. Aggarwal got incentives for the maximum 20 GWh that any one company was eligible to receive. It wants to research and develop its batteries, and fill the gaps with investments like the one it made recently in Israel's store dot, whose silicon-dominant anodes claim to provide rapid charging. To show his commitment to R&D, a former chief executive of LG Chem Power Inc., the U.S.-based research arm of the world's No. 2 EV battery maker, to the Ola Electric board. Like Ambani, Aggarwal too has made a pivot. In 2011, three years after graduating with a computer science degree from the prestigious Indian Institute of Technology, he co-founded Ola Cabs, a ride-hailing app that competes in India with Uber Technologies Inc. But as the pandemic sucked the wind out of transportation services, Aggarwal jumped onto the EV manufacturing bandwagon. India is at the cusp of an EV revolution. Electric two-wheelers, which cost roughly $1,400 apiece, will see faster adoption in India than smartphones, according to Goldman Sachs Groups. Inc., whose base-case scenario is for EV penetration in the segment to swell to 38% by 2030 from 2% this year. Which makes tiny Ola Electric the big exception - and in more ways than one. China's ride-hailing giant Didi Global Inc. has become an unwitting poster child for Beijing's crackdown on the tech industry. Grab Holdings Ltd., Southeast Asia's Uber slayer, has diversified into financial services. But they all stuck to the consumer-data business - none of them hit the shop floor to get into EV and battery manufacturing. The path ahead for Aggarwal is guaranteed to be a potholed Indian road, but as long as he can keep private-market investors, consumers, and - above all - policymakers hooked to his vision, he can clock the miles.
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