Electric Cars are good for Indian Economy

There are discussions making rounds how good or bad are Electric Cars for Indian economy. I believe electric cars are going to be a game changer and will be good for Indian economy for the following reasons.


Reducing addiction to oil:
We are a trade deficit country. Oil the biggest bill in our import list. We maintain oil reserves to the tune of 15 to 45 days of the demand to ensure that country does not come to a halt if the oil supply is cut during a war or a geopolitical conflict. Think of a scenario where we reduce the oil import significantly as we commute through battery driven cars. Our import bills will be down. We will become a trade surplus country. Rupee will rise to below 50 Rupees levels against USD. And we do not have to maintain massive oil reserves for national security and we can ignore geopolitics.

CAD, USD/INR (Source: Tradingeconomics.com)

New investments & more jobs in power sector: As these electric cars need to be electrically charged, that will take the demand up for electric power supply. And it would mean new investments flowing into the entire power sector - coal fired power plants, hydro, wind and solar. This infra upgrade will create a huge number of long lasting jobs.

Consumer perspective: These electric cars are run by energy stored in batteries and do not need an engine (petrol or diesel). When engine is absent, you don’t need oil filter, air filter, fuel filter which are consumables and replaced during service now. You do not have to get your Engine oil or coolant oil changed as well. And there is no exhaust system and no emissions. Noise and vibration is reduced significantly and so is wear and tear. All these things mean your maintenance and repair bills come down sharply. So is the running cost per km too. That would pay for replacement of batteries every 4-5 years.

Good for environment: If we can charge the cars through renewable energy, we will be doing a great service to environment and to the future mankind. Reduced emissions lead to better air quality and limit damage to our lungs. Is not it good?

Negative on existing industry but why can’t they transform? The traditional automobile industry will see negative impact but why can’t they transform with the changing needs? And there will be ample time for it. Even if we assume few of them will have to close down, the net impact to economy would be still positive.

I am looking forward for these cars to become mainstream. And I need to research battery companies to make them part of my equity portfolio.