Getting it right on electric cars, mostly PDF Print E-mail
Friday, 27 December 2019 03:53
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Earlier this year when NITI Aayog asked all two- and three-wheeler manufacturers to submit a plan to phase out fossil-fuel (internal combustion) engines by 2025, it had sent the entire automobile industry in a tizzy, not just two-wheelers. Although most auto firms were getting ready to roll out electric cars—around a dozen launches are planned for next year—no one wanted a diktat from the government. However, the transport minister was quick to clarify the government’s stand and assuage concerns. The government has since taken a moderate approach, and is instead trying to work on stimulating demand. The finance minister cut GST rates from 12% to 5% and, in addition, an income tax deduction of Rs 1.5 lakh was given on the interest payable on loans, taking the total benefit to around Rs 2.5 lakh over 3-5 years for a mid-sized electric car.

If this wasn’t enough, state governments are also looking to add to it. Delhi has, for instance, notified new rules that offer Rs 1.5 lakh rebate for the first 1,000 cars, and a Rs 5,000 rebate per kWh on two-wheelers, which means a Rs 10,000 off on a 2kWH two-wheeler; if the manufacturer/dealer matches it, another Rs 5,000 will be given as ‘scrapping incentive’. The rebate also extends to e-autos and e-rickshaws, as the government will offer Rs 30,000 incentive coupled with a 5% loan subvention. In addition, it plans to add 1,000 electric buses to the public transport fleet in 2020; there are no incentives for this since the buses will be owned by the government. Although electric two-wheelers constitute only 0.2% of the total two-wheeler sales—cars are even lower at 0.1%—the Delhi government has plans to push 35,000 EVs by next year, and 5 lakh EVs over the next five years. The government has asked last-mile delivery operators—ecommerce, food delivery, etc—to transition 50% of their two-wheeler fleet to EVs by FY23, followed by 100% in FY25; this could, however, be a problem if two-wheeler prices aren’t reasonable. Allowing bike-taxis to operate in the city is the major reform. With this, the likes of Uber and Ola would be able to operate EV bike taxis.

Delhi’s push is indeed in the right direction. The government has also mandated 250 pubic charging/swapping stations within the next year to create charging infrastructure. While the availability of charging stations will help increase adoption, this is not the only factor. Since two-wheeler batteries can be easily swapped, oil marketing firms could offer yearly AMCs and, instead of getting petrol filled, two-wheelers can just get their batteries swapped. While some cars are offering even higher mileage-per-charge, if a car can run 150-200 km in city conditions, with the air-conditioning on, a lot of the charging can be done at home at night. Also, as there are more EVs, the infrastructure will also develop alongside.

Of course, if the major source of electricity continues to be coal, EVs are really just about shifting the pollution burden since, in many cities like Delhi, thermal plants are being outlawed. According to the government, as compared to India’s plan to have 175,000MW of clean power by 2022, the country will reach 100,000MW next year. It is true that renewable energy operates at lower capacity than thermal plants but, as battery technology gets better, this too will change.


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