Never before have electric cars been as much in the news as in the last few months. Tesla, the American maker of premium electric sedans and SUVs such as Model S and Model X, recently came out with Model 3, an affordable electric car with a price tag of $35,000.
In early July, Volvo, the Swedish carmaker, announced that all its car models launched after 2019 will be electric or hybrid. Daimler (Mercedes Benz) has accelerated its electric vehicle production plans and is working towards a 10-model electric vehicle portfolio globally by 2022. Jaguar Land Rover (JLR), the British car maker, also upped the ante with its all-electric I-Pace, which is expected to be out in the second half of 2018. By 2020, every new JLR vehicle will have an electric option.
It’s not just auto-makers who are turning environment-friendly. France recently decided to end sale of petrol and diesel vehicles by 2040 and UK too followed suit. All this goes to show that world over, vehicular pollution and its impact on air quality is taking centre stage.
In India too, it is no different.
Indian scene
The odd-even experiment in Delhi, the ban on diesel cars/SUVs with engine capacity over 2000cc in Delhi and NCR by the National Green Tribunal, the Supreme Court’s decision to not extend the timeline for adoption of BS IV standard fuel across the country and the government’s decision to jump directly to BS VI norms by 2020, show that India is getting serious about curbing vehicular pollution. The most ambitious of all the measures taken so far is the plan to have an all-electric vehicle fleet in the country by 2030.
As a first baby step towards this, the government rolled out a National Electric Mobility Mission Plan in 2013, under which it has been extending sops for the manufacture of greener vehicles through the FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) scheme in the last two to three years.
For instance, electric vehicle manufacturer Mahindra Reva Electric gets an incentive of about ₹1.24 lakh per vehicle under this scheme. Mahindra and Mahindra’s e-Verito and and e-Supro (commercial vehicle) have also been earning a subsidy of ₹1.24 lakh to ₹1.87 lakh per vehicle. Phase 1 of the scheme, which began in April 2015, has been extended until September 30, 2017.
Mild hybrids
Since FAME also encourages hybrids alongside electric vehicles, auto manufacturers came up with ‘mild hybrid’ technology for few of their existing models using the subsidies under the scheme. Eventually, these vehicles began taking in a chunk of the incentives under FAME. Reports available in the public domain show that over 60 per cent of a total ₹196.77-crore incentive provided by the government from April 2015 till June 2017 under FAME went to ‘mild hybrid’ four-wheelers.
Considering the government’s ambition of having an all electric fleet by 2030 and the fact that electric vehicles are more environment-friendly, it has decided to indirectly discourage hybrids. For one, it has pulled mild hybrid vehicles out of FAME since April 1, 2017.
Second, it is taxing hybrid vehicles on the same lines as normal vehicles under the GST regime. Earlier, hybrid vehicles enjoyed an excise duty of 12.5 per cent, as against the 24-30 per cent on large cars. Under GST, along with large cars and SUVs, hybrids will have to pay a 15 per cent cess over the scheduled rate of 28 per cent, increasing the overall tax incidence. On the other hand, electric vehicles are taxed at 12 per cent and are exempt from cess.
Road ahead
A paper titled ‘India Leaps Ahead: Transformative Mobility Solutions for All’ was put out by the NITI Aayog in May; Laying out a roadmap for 2030, it bats for 100 per cent electrification of three-wheelers, four-wheelers (commercial) and public transport vehicles, while aiming for 40 per cent electrification in two-wheelers and four-wheelers used for personal transport.
According to the report, if the above mix is achieved, India’s energy requirement for transport will come down 64 per cent from what will be required if the current scenario continues until 2030. Similarly, emissions are expected to come down by 37 per cent.
Affordability
Two things are key to making this a reality. One, the availability and affordability of electric vehicles. Barring Mahindra Electric, no other Indian auto manufacturer currently has electric cars in its kitty. Even these vehicles are considered expensive, especially given their limited range, in comparison to similar-sized cars that run on petrol and diesel. The minimum price for Mahindra e2o Plus, for example, is ₹7-8 lakh.
Tesla has plans to bring the Model 3 to India; other foreign car makers may bring their electric vehicles too. But pricing will remain a hurdle if mass production and mass adoption are required. The cost of the battery has a lot to do with the final price. Typically, the battery pack constitutes 30-40 per cent of the cost of an electric car and needs to be imported. Hence, innovations and incentives will be necessary.
Two, it’s essential to roll out charging stations. While Power Grid Corporation, NTPC, BHEL and a few other companies/consortiums have started work on setting up charging stations across the country, it may be quite some time before they are up and running. Here too, the government needs to chip in with more funds.