Hybrid cars—will they work for India?

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: The last few weeks has been abuzz with a slew of launches in the auto industry in India. Two themes have clearly emerged as the next wave—lower price and eco-friendliness. The answer to eco-friendliness has been pretty dominated by the hybrid vehicles displayed at the Auto Expo, New Delhi, this year by many players. Following this, of course, have been a barrage of articles on why hybrids is ‘the technology’ for India and its impact has been discussed and debated in various forums. This effort is to assess the potential economic and environmental impact of hybrids and whether this could well be just another bright spot among the numerous efforts in this direction.

In its present form, with a likely price premium of 60% over its equivalent model in India, we can safely assume that hybrids are going to be preferred mostly by car owners and not by commercial vehicle owners.

Going forward, probably the premium could reduce to about 10% if the government offers a favourable tax structure and incentives akin to the developed countries like the US. Even this is unlikely to cause a major shift in commercial vehicle sales unless fuel prices increase dramatically.

With this in perspective, we could calculate the economic impact of hybrids in the Indian context. According to recent statistics, there are close to 51 lakh petrol cars on the Indian roads, consuming around 315 crore litre of petrol a year. This translates to an amount of Rs 9,624 crore in the import bill.

If we assume an optimistic scenario of even 5% penetration (the present penetration in the US is around 3%) of hybrids in the next few years, the savings would be of the order of Rs 240 crore in the import bill per annum (assuming a 50% reduction in petrol consumption by hybrids).

We could compare this to the one time premium for purchasing hybrid cars. Assuming a base model price of Rs 10 lakh, a 60% premium would amount to an investment of Rs 6 lakh more per car. Therefore, for 2.5 lakh (5% of petrol cars on the road) cars the total price premium would add up to Rs 1,500 crore.

This number is a staggering six times more than the savings in oil import per annum. In other words, if the government were to subsidise the premiums in some form, it would wipe off the savings of up to six years or probably a couple of years if a moderate oil price rise were to be taken into consideration.

Justice would not be done if we do not look at the environmental impact of using hybrids as well. Emissions from petrol cars alone are 22.03 million tonne of carbon dioxide a year. Going by the same assumption of 5% hybrid vehicle penetration, there would be a reduction of 0.55 million tonne in carbon dioxide emissions per annum (assuming a 50% reduction in emissions through hybrids). At 0.23% of the mammoth figure of 244.8 million tonne of total vehicular carbon dioxide emissions per annum, this impact probably is not significant. While on the subject of environmental impact, it is also critical to look at the battery pack of hybrids which is made of nickel-metal-hydride.

Battery disposal is something that clearly lacks regulation and it is not uncommon to see batteries disposed off in public dustbins. Unlike Western countries where there are strict rules and regulations for disposals that are strictly enforced, India has a long way to go. These need to be addressed before introducing new sources of battery waste.

There need to be initiatives to find alternate sources of vehicular energy both from an economic as well as environment perspective. In this effort, hybrid technology undoubtedly is a step in the right direction. But, in the short term, there’s still ground to cover to make this workable in the Indian context and probably there are other easily surmountable means to achieve the same.

If better road infrastructure in cities could lead to a saving of even 10% of driving time, we could safely assume that the savings in fuel would, at the least, be 5%. And road infrastructure is not something that has been discovered in the last few years. In countries like Singapore, despite similar weather conditions as in India, it is rare, if ever, to see potholed roads. Similarly, if of the two lanes available on a road, one is not occupied by parked vehicles or vendors, we straightaway have 100% more capacity.

This again is more of an enforcement of zero tolerance accepted worldwide rather than a concept of the future. This list can go on with other low hanging fruits like, improved public transportation, enforcement of emission norms and strict traffic regulation, which would directly impact economics as well as environment as compared to what hybrids can bring in the short term. This is something which the policy makers should keep in mind while planning the future of Indian transportation.