India’s Transition to EVs Threatens Millions of Auto Sector Jobs, at a Time of Rising Nationwide Unemployment

A bespectacled man sits behind a table, on a black chair, and the walls around him are lined with racks full of boxes of different sizes.
Article 14
Hyderabad, India
India’s Transition to EVs Threatens Millions of Auto Sector Jobs, at a Time of Rising Nationwide Unemployment

In Yousufguda, a warren of narrow, bustling lanes with working class homes and street vendors in Hyderabad, Telangana's capital, Bhumeshwar Rao, a man in his thirties, explained how he acquired his skills as a two-wheeler mechanic. 

He began as a “helper” to another mechanic, learning the intricacies and engines of many generations of petrol-driven motorcycles and scooters—their air filters, fuel injectors, chokes, exhausts and a host of other mechanical parts. Over recent years, Rao said, he had watched, first with interest and then with concern, as two-wheelers changed from petrol to electric, with charging stations and electric bike showrooms mushrooming across the city. 

Rao said he had recently begun to worry over the impending revolution in his line of work. “The rise of the electric vehicle (EV) market is a bane for small mechanics like me,” he said. There are fewer moving parts, and the majority of those he is familiar with are not part of electric scooters and motorcycles, which do not have, for example, air filters, fuel injectors, chokes, fuel tanks and exhausts.

A motorbike and two scooters stand in front of a shop laden with motor-parts.
Car mechanic Bhumeshwar Rao’s shop in Telangana. Rao learnt the ropes as a mechanic from years as an apprentice / Credit: Article 14​.

Without the capital to put himself through a technical course that might help reskill him to also repair electric two-wheelers, he has begun to fear a drop in his income even as a warming world looks for alternatives to fossil fuels. 

“I have a family with a wife and two young children,” Rao said. “All I want is to provide my children with a good education. This uncertainty of losing customers is stressful.”

Rao said he earned Rs 600,000-Rs 700,000 annually, though it was not always a steady income. He represents tens of thousands of informal independent mechanics, running their own businesses or employed in garages, contemplating an uncertain future as the Indian automobile sector transitions to EVs. 

This uncertainty comes at a time of rising unemployment in India, with a surge in people looking for work, around 37 million, and about 10% unemployed in urban areas. Nine of 10 are employed in small businesses, including mechanics, spare-parts dealers and others dependent on the conventional auto industry. 

The coming changes in technology, production processes and consumer behavior will affect employment in these industries, said experts, with several links of the traditional value chain of manufacturing, sales, servicing, repairs and garages changing fundamentally. 

The energy needed by various means of both passenger and freight transport is reflected in the emissions produced by the transportation industry. The transport industry's direct carbon dioxide emissions in 2020 totaled 272 million tons. With a share of more than 92%, the road sector, combining passenger and goods vehicles, dominates transport emissions. 

Electric mobility will be a key component of the roadmap to achieving India’s plans to achieve net zero emissions by 2070, a target of 45% reduction in emissions by 2030 and a target of deriving 50% electricity from non-fossil fuel-based energy sources by 2030.  

According to a 2022 compilation by the World Resources Institute India, several new elements will be added to this chain, including EV charging infrastructure manufacturers, charging service providers, cell and battery pack manufacturers, and also to current post-sales segments, including servicing, repairs and replacement of parts.   

“These changes coming very soon may result in job losses in these segments that will undergo change, though simultaneously there will be new employment opportunities in the EV industry,” said Siddharth Goel, senior policy advisor at the International Institute for Sustainable Development (IISD), a think tank based in Canada.

Though only 2% of India’s vehicles are EVs, an indication of the coming transition comes from EV sales, which rose 155% in 2022-23 from the previous year, from 458,746 units to 1.7 million units, clocking a million vehicles in a single fiscal year for the first time. 

The automobile sector is one of the major sources of greenhouse gas emissions. In 2019 this sector accounted for 23% of global CO2 emissions and 29% of emissions in the US alone. India is the fourth largest greenhouse gas emitter after China, US and the European Union. In 2021, India’s share of global greenhouse gas emissions were at 7.5% coming up to 2.7 billion tons, though India’s per capita emissions are comparatively low.

Electric vehicles are undoubtedly a greener option because they have a lower lifetime carbon footprint than conventional, internal combustion engine-powered automobiles and trucks. At the same time fossil fuels like coal or oil continue to dominate as the primary source of power for electricity grids worldwide, electric vehicles rely on this energy for their charging needs extensively. 

According to a 2019 study from the Massachusetts Institute of Technology Energy Initiative, the battery and the making of an EV produces more emissions than creating an automobile. But over time, EVs’ improved energy efficiency more than makes up for those higher environmental costs.

Fears across vehicle supply chain

In the busy bylanes of Ameerpet in north-western Hyderabad, Rakesh Jha, 43, said he has owned an automobile spare parts company for 30 years, the Raj Auto Parts store, with a loyal clientele of local mechanics, who seek spare parts and accessories and regular servicing materials, such as motor oil, lubricants, coolants, radiators, filters, brake fluids, clutch pads and brake pads. 

Jha has built a network of distributors and stocks a wide range of products, all of them for traditional internal combustion engine (ICE) vehicles.  

A key part of a supply chain that will be affected as India transitions to EVs, Jha said he believed the demand for auto parts such as those he stocks currently will remain mostly unaffected for another 10 years. 

“The EV market is growing and I am ready to change and stock my shop accordingly,” he said. 

Jha said he would eventually stock parts for EVs, though that may entail a considerable amount of relearning of his business and re-establishing his supply chains. “We have to be prepared to meet the demand,” he said.

Y Vamshi Krishna, owner of Race Kraft, a car upgrade, service and repair center in Hyderabad, had mixed feelings about EVs. 

“Every third vehicle that I see on the road is an electric vehicle,” he said. “The awareness is definitely catching up, and this will have a definite impact on small informal workers like mechanics and spare parts dealers.” 

Krishna said it would be difficult to assess now how deep this impact may be. “Only time will tell,” he said.    

T Sai Kumar, a technician at a Hyundai cars dealership in Hyderabad, was apprehensive about his future. “I am scared that people like me who only depend on mechanical jobs are facing a tough future,” he said. “We may lose our jobs as we don’t have the necessary skills.” 

He said dealers were also worried about the recent recommendation for a total ban on diesel vehicles by the Energy Transition Advisory Committee and the rising conversion to electric vehicles. 

The future of workers

Modeling studies by think-tanks such as the Delhi-based Council on Energy, Environment and Water (CEEW) have shown that the overall impact on jobs in India's automotive sector will depend on the extent of expertise in indigenous manufacturing of the EV ecosystem.

According to Volza's India data on imports (Volza is a platform which displays import and export data of 209 countries), 60,162 electric car import shipments were made to India from 947 suppliers by 1,221 India importers in 2023. The majority of India's electric cars were imported from China, Vietnam and Germany.

An engineer with an auto-manufacturing major on the outskirts of Delhi told Article 14 that all the major companies in the sector, such as Tata, Mahindra, Hyundai, Maruti, Toyota, Hero and others are looking into what specialized training will be required for workers as the transition to EVs continues. 

Most of the original equipment manufacturers (OEMs)  offer specialized training sessions to meet skill requirements to work on electric vehicles. 

Raj Kumar Singh, a working committee member of the All India Trade Union Congress (AITUC), affiliated to the Communist Party of India (CPI), said while the transition to EVs would benefit large numbers of people by reducing pollution and leading to better quality of life, already marginalized informal automotive workers feared job and business losses.

“During the transition, employee wellbeing is of utmost interest to us,” said Kumar, who is based in Ahmedabad and works with auto workers in the town of Sanand. “We are hoping that employers retain the employees and train them for future needs. As of now there is no clarity about this issue.” 

In the automotive industry, they found that over the past five years, the proportion of informal workers in total engaged manpower has more than doubled and is now close to 75-80% of the total.

In the Manesar area of Gurgaon, Mahender Kapoor, a lean man in his forties, has worked with an auto manufacturing company as a welding technician for eight years.  He and many of his colleagues were in a dilemma about their future prospects in an era of an EV boom. 

“Our working hours are eight hours, but we usually end up working for 12 hours,” Kapoor said. “It is really stressful and somedays I find it difficult to even fall asleep.” 

Some colleagues were laid off recently, and there was a growing fear of job losses. A member of a workers’ union, Kumar said after the union's intervention, overtime payments were doubled in 2019. 

Manesar has active unions, and after numerous employees were fired from their jobs, the unions went on strike to seek the workers' reinstatement.

Opportunities To reskill a large workforce 

Aarti Khosla, director of Delhi-based think-tank Climate Trends, said the transition from conventional vehicles to EVs was an excellent opportunity for India's automotive workforce to be re-skilled and re-employed. 

A significant part of the assembly line may remain the same, she said, retaining that section of jobs until greater investments boost India's automotive sector output, at which time even more workers will be needed. 

According to 2021  data from the ministry of skill development and entrepreneurship, supervisors in the automotive sectors had higher education degrees or ITI/ diplomas or both. 

The ITI course or diploma programs serve as a basic educational requirement for a number of common job categories in the sector, including electrician, machine operator, mechanical technician, fitter and machinist.  

“The differences in designing and manufacturing the electric powertrain does initially call for skills in electronics and materials engineering, but with focused training, a large section of the ICE already highly technical design group can be suitably re-trained,” said Khosla. 

More than 70% of the lithium-ion batteries used in India [for EVs] are imported. However, several automakers are building their own battery production facilities to adhere to the government's requirement that 50% of the components be sourced locally. 

These firms will presumably re-train at least a portion of their workers, not only because it is more cost-effective to do so but also because their learning curve will need to be gentler than that of new hires with no background in the automotive industry. “In order to close the skills gap at the design and conceptualization stages, prominent educational institutions across the nation, like the IITs (Indian Institutes of Technology), supported by regional industrial training institutes (ITIs) have also created EV-specific courses,” said Khosla. 

Two-wheelers, three-wheelers race ahead

Goel of IISD said the transition may be quicker in the two-wheeler segment than in other segments. According to analysis by the Niti Aayog, the Union government’s think-tank and research body, by 2030, 80% of all two-wheelers sold in India will be electric.

Increased environmental awareness and the relative ease of maintaining electric vehicles has driven up demand for EVs, with demand for electric two-wheelers up by 422% between 2019 and 2021. (In the same period, demand for electric three- wheelers rose by 75% and four wheelers by 230%.) 

According to Goel, trade unions should be meaningfully consulted and involved in transition planning.

“With an estimated 50% of the Indian auto industry workforce comprising contractual and informal workers, it is also essential that their interests are represented in just transition dialogues and transition planning, through the involvement of civil society representatives," said Goel. 

India’s move towards clean mobility has so far been led by the commercial three-wheeler segment, which provides passenger services throughout the country. One reason for the rapid rise in this sector is the ability to swap batteries without having to wait for a recharge. 

RACEnergy, a battery swapping start-up in Hyderabad that started operations in 2018, has now secured agreements with Hala Mobility, an EV rental service in Hyderabad, so that it can move into the two-wheeler market. According to the company, its technology helps discharged batteries to be swapped in 4 seconds and more than 500 battery swaps are now happening everyday in Hyderabad. 

According to co-founder Gautham Maheswaran, the shift towards EVs brings new opportunities for the automotive industry and with it, new areas of employment, particularly in the production of EV components such as batteries, electric motors, and power electronics, which translates to more jobs. Existing employees in the traditional automotive space can be upskilled and trained, he said, to take on these new roles. “This can be a win-win situation for both the industry and its workforce,” said Maheswaran. 

Two hands pulling a box out a wall lined with numerous other such boxes.
At battery swapping start-up RACEnergy in Hyderabad, more than 500 battery swaps are now happening everyday / Credit: Article 14.

As electric three-wheelers have lower lifespan costs (the ability of a vehicle to operate properly for a certain number of years) than conventional models and are becoming more popular due to government incentives and rising fuel prices, more than half of India's three-wheeler registrations in 2022 were electric. 

Big plans, more jobs In green mobility 

EV sales in India saw a 2,000% rise between 2019 and 2022, according to a recent International Energy Agency report, Global EV Outlook

With the additional push from production-linked incentives (PLI) programs, India may increase domestic production of EVs and batteries. 

In Telangana, Mahindra Last Mile Mobility (LMM), a division of automaker Mahindra & Mahindra (M&M), held a ground-breaking ceremony for a new manufacturing unit at its existing plant in Zaheerabad, Telangana, on 24 April 2023. 

It plans to construct a battery assembly plant at this new location and make electronic and drivetrain (the components of a vehicle that deliver power to the drive wheels) components for electric three-wheelers and four-wheelers. The plant will employ 800 to 1,000 people in the area. 

The state government released its Telangana Electric Vehicle and Energy Storage Policy in October 2020 with the goal of promoting the EV industry and positioning the state as a top location for EV production facilities and the adoption of green vehicles.  

The number of electric vehicle registrations has significantly increased over time. 50,309 electric two-wheelers and 5,531 electric four-wheelers were registered up to March 31, 2023, according to information from the Road Transport Authority (RTA). According to the Road Transport Authority (RTA) data, there are currently 62,666 registered EVs on the road in Telangana. 

The Telangana State Road Transport Corporation (TSRTC) collaborated with the Hyderabad based e-bus manufacturer Olectra Greentech to purchase buses valued at roughly Rs 500 crore (USD 61 million). Olectra trains the employees to meet the changes in technology. 

“The new requirement for electric vehicles will not disrupt the existing ICE vehicles,” said N Venugopal Rao, vice-president of sales and marketing at Olectra Greentech. He said they run 40 buses in Telangana from the city to the airport, and this move has generated employment for drivers and technicians, and for workers in the charging stations’ infrastructure segment and in their operations.

According to him, Olectra will deploy 500 buses to TSRTC for city commuting. These drivers will be trained to drive electric buses; they have charging infrastructure at six locations, another avenue for generating employment.

The Telangana government is aiming to have a fleet of 3,360 e-buses by 2025, with TSRTC putting a strong emphasis on making the public transport system "green". These electric buses will replace diesel buses, and their introduction will be in a phased manner, according to V C Sajjanar, the managing director of TSRTC. In 2023, 500 electric buses are all set to enter the public transport system of Hyderabad.

The Maharashtra Government has approved investments worth Rs 10,000 crore for electric vehicles from Mahindra & Mahindra, one of India’s leading automotive companies. The company will set up an EV manufacturing plant in Pune. The government has also allocated a budget of Rs 25 crore to offer incentives to buyers of electric two and four wheelers.

Go Green Yojana or the Gujarat Two Wheeler Scheme 2023 has been launched to offer organized and unorganized sector workers electric e-vehicle subsidies on the purchase of e-scooters, e-bikes, etc. 

In 2023, Gujarat's government will also launch a three-wheeler subsidy program. The government would offer a subsidy on the purchase of e-rickshaws under the Gujarat Electric 3-Wheeler Scheme. MG Motor, a British brand owned by Shanghai Automotive, the largest automaker in China, wants to invest $100 million to increase the existing capacity at its current site in Halol, Gujarat, and diversify its product line to include more electric vehicles. 

In order to grow its electric vehicle (EV) ecosystem, Hyundai Motor India Limited (HMIL) has announced fresh long-term investment plans in the state of Tamil Nadu. They intend to invest Rs 20,000 crore gradually over a ten-year period, from 2023 to 2032. The government would support Chennai, Coimbatore, Tiruchirapalli, Madurai, Salem, and Tirunelveli as pilot cities to deploy electric mobility solutions as part of the Tamil Nadu Electric Vehicle Policy 2023. The power tariffs for public charging stations will also be revised, incentives will be provided for charging and battery swapping stations, and for the conversion of ICE powered vehicles. Furthermore, incentives would be given to commercial cars costing between Rs 5,000 and Rs 10 lakh. 

The Tamil Nadu government has also decided to exempt electric vehicles from paying road tax, registration fees, and permit fees till 2025.

India’s ambitious climate goals will continue to push this demand up, industry leaders told Article 14

This story was produced with support from Internews' Earth Journalism Network. It was first published in Article 14 on May 29, 2023 and has been lightly edited for length and clarity. 

Banner image: Ameerpet auto-parts dealer Rakesh Jha will have to relearn his business and re-establish his supply chain as EVs become more popular / Credit: Article 14.

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