By Faraz Khan and Saket Mishra
Technology associated with electric vehicles (EV) is rapidly evolving and by certain estimates total cost of ownership for EVs has already fallen below that of internal combustion engine (ICE) vehicles. Some reports suggest that EV sales in India contributed more than 5% of total vehicle sales between October 2022 and September 2023. As prices become competitive and charging infrastructure increasingly available, it is estimated that within this decade EVs could account for more than 40% of India’s automotive market and EV sales will likely cross $20 billion in the two-wheeler sector, $1.7 billion in the three-wheeler sector, and $ 16.5 billion in the four-wheeler sector (including buses).
The government is incentivizing EV manufacturers by offering various incentives through schemes such as FAME and other production linked incentive schemes. A variety of EV products are being frequently launched in the market across segments. While late-stage funds are entering into partnerships with established automobile manufacturers, early-stage capital is placing its bet on start-up EV and battery manufacturers, amongst other allied businesses such as battery-as-a-service and leasing of EV fleets to last and middle mile operators.
Compressing Design-to-Market Timeline
With competition heating up, reducing the time required to take new products from design-to-market has become increasingly important. One key factor in this process is ‘homologation’ - i.e., obtaining a ‘Type Approval Certificate’ to ensure that a particular vehicle is roadworthy and matches specified criteria laid out by the government for public use of such vehicle.
This article examines the process by which an EV or battery manufacturer can obtain a Type-Approval Certificate for an EV or battery product under the (Indian) Motor Vehicle Act, 1988 (MV Act) and the (Indian) Central Motor Vehicles Rules, 1989 (CMVR and, collectively, the MV Regulations).
As a general rule, EVs expressly fall within the ambit of the MV Regulations. 2W EVs that weigh less than 60 kgs (excluding the battery) with a top speed less than 25 km/hr and power less than 0.25 KW do not require homologation. Such 2W EVs will nonetheless attract liability for defects under the Consumer Protection Act, 2019. All other EVs fall within the class of ‘battery operated vehicles’ as defined under the CMVR.
Type-Approval for a New EV
Like for ICE Vehicles, the homologation process requires an EV manufacturer to physically deliver to a ‘Testing Agency’ designated by the government, a prototype of the vehicle it seeks to have certified. The Testing Agency shall run such vehicle through a series of tests to determine if such vehicle meets the applicable Automotive Industry Standards (AIS). The AIS govern various aspects including manufacture, functional safety, energy consumption and range measurement of EVs and batteries. Every EV and battery manufacturer has to ensure that their products mandatorily comply with the AIS.
Upon successful testing, the Testing Agency will issue a Type-Approval Certificate for the vehicle to the manufacturer certifying compliance with the MV Regulations. A vehicle that is not type approved cannot be sold for public use and any violation can result in significant fines and criminal liability as well.
Until recently, the Automotive Research Association of India, Pune (ARAI) was the prominent Testing Agency for all vehicles including EVs. In recent years, other Testing Agencies such as NATRAX, Indore, ICAT, Manesar and GARC, Chennai have also gained favour. Notified as late as 2019, some of these Testing Agencies offer state-of-the-art infrastructure allowing for efficient, timely and accurate testing.
Obtaining a Type Approval certificate for an EV today can take anywhere between 6 to 12 months. However, with EV manufacturers having the ability to access more Testing Agencies in recent times, the time required to complete the homologation process and obtain type approval certificates for each model is expected to come down.
Type Approval For Batteries / Other Components of an EV
Manufacturers of batteries and other components for which standards have been notified are required to ensure that such battery or component meet the relevant safety standards applicable to the manufacture of such component.
AIS 156 is one such safety standard that was put in place to avoid and reduce battery related fire incidents involving EVs. It applies to battery packs, charging infrastructure and battery management systems. Its implementation did, in the near-term, result in a requirement to re-certify certain components and increase in costs for manufacturers and suppliers. Implementing detailed safety requirements for EV products should only benefit the EV industry in the long term.
The Bureau of Indian Standards has also formulated its own standards to ensure safety of EV batteries but these are not mandatory yet. If enforced, it may create further challenges for battery and battery related component manufacturers to ensure compliance with multiple sets of rules promulgated by different authorities.
Using batteries that are type approved in an EV does not exempt a manufacturer from obtaining a separate type approval certificate for such EV once laden with such certified battery. In the case of unladen EVs (not carrying a battery), it is not only the vehicle that has to be type approved but also a prototype of the vehicle with the battery installed, prior to such vehicle being sold or put in public use. In fact, where a manufacturer decides to change the type or model of battery used on a previously certified EV model, such manufacturer will be required to re-submit such EV with the new battery to obtain a fresh type approval certificate. This would apply irrespective of whether such a vehicle is installed with a fixed battery or uses battery swapping.
In conclusion, it is evident that any efficient ‘go-to-market’ strategy for a manufacturer of EVs, batteries and other components should take into consideration meticulous adherence to standards during the manufacturing process. This will significantly help avoid undue delay in the process of obtaining type approval certificates for electric vehicles. It is advisable for manufacturers to remain keenly involved during every type approval process for their products, such that questions raised by the Testing Agency are answered promptly and defects rectified swiftly.
Faraz Khan (Partner) and Saket Mishra (Associate) are with INDUSLAW.
Views are personal and do not represent the stand of this publication.
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