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The history of electric vehicles is a relatively short one, but Kartik Gopal has spent a significant part of his career in the industry. Gopal, a senior industry specialist on IFC’s Climate Strategy and Business Development team, has been working in the electric-vehicle industry for more than 11 years, including a time when he led strategy and business planning at an Indian electric-vehicle car manufacturer. Gopal, in this interview edited for length and clarity, believes that the industry is poised to take off in the next several years.
Q: You’ve been working in the electric vehicle field for a while now. What has changed in the last decade?
A: The biggest change or shift is in the mindset–the positive acceptance of EVs (electric vehicles) is happening and that there’s a feeling it is inevitable. For a long time, it seemed like it would never happen, or it would start gradually. But the foundation has become strong. There is no going back on this anymore.
Q: That’s clearly a reflection of the growing awareness of climate change, but awareness doesn’t always translate into investment. So why is there ‘no going back’ on this?
A: There’s a lot of traction with COP26 and many announcements coming in, but on the ground it’s driven by tremendous amounts of investments on the supply side, and the very keen interest from governments, societies, fleet operators, and individuals interested in EV adoption, whether it is for public transit, fleet operations, or personal mobility.
There are differences in the adoption pathways of electric vehicles between developed economies and developing economies. In developed markets, the personal car has been the focus of e-vehicles adoption in the last decade. Now, we’re seeing adoption in commercial operations as well. In developing economies, the focus has been more on smaller vehicles–the two-wheelers and the three-wheelers, and commercial applications such as last-mile vehicles.
Q: What are last-mile vehicles?
A: These are vehicles that are used for deliveries from a warehouse to a home, or taking a person from their home to a metro station–basically, the movement of people or goods for short distances on focused routes and applications within a city. In developing economies, passenger cars are also starting to see traction, but at a slower rate than developed markets because e-vehicles are expensive. And across markets, we’re seeing a push to electrify public transportation, namely electric buses.
This is a very exciting time because you rarely get to see the transformation of a 100+ -year-old industry that is so necessary for day-to-day life. But having said that, there are clearly challenges. Before it goes mainstream, the practical problems need to be worked on throughout the value chain.
Q: Where do you see future investment opportunities around e-vehicles?
A: We clearly see opportunities across the value chain. It starts with mining the specialized kind of materials for batteries and components for vehicles. Automotive companies and their suppliers are investing in creating new EV products. Fleet operators and individual buyers are seeking financing for vehicle purchases. There’s also opportunity in the battery-charging infrastructure and the recycling of the batteries. Financial institutions will play a huge role in enabling this transition.
In addition, new financing models are emerging such as asset-holding companies starting to own and lease or finance e-vehicle fleets. EVs have a high capital cost, but a low operating cost, so there will be specialized companies that understand the risks and leverage the opportunity. And lastly, we expect to see investments around the end-of-life of the vehicles. A recycling industry has to be created, specifically on batteries as well as looking at other applications for the batteries.
I believe the change to adopt e-vehicles will happen fast. In most developed countries, the percentage of battery EV sales are in the single digits of all vehicle sales today. But in five years, that number could go in double digits – maybe 25-to-30 percent of all sales.
Q: What motivates you to work in e-vehicles?
A: It’s a very interesting time when there is a lot of private sector work happening that also is having a broader societal impact. That’s deeply satisfying.
Published in November 2021