Buying an electric car or two-wheeler may become a lucrative option starting next year, with the entire eco-system of subsidy for customers, charging stations and research grants for component development being put in place.
Around R300 crore, of a total of R1,100 crore initial investment recently cleared by the inter-ministerial National Council on electric mobility, has been earmarked for setting up charging points in existing petrol stations across three pilot cities, including Delhi. The remaining R800 crore will fund local development of key vehicle parts such as motors and controllers at top state research institutions, such as IIT, C-DAC and CSIR. Part of the funding will come from auto cess, and the rest will be allocated from the Budget.
?We will send a Cabinet note by December-end and expect an approval and a formal launch by the prime minister by March next year. For the charging station, we?ll rope in PCRA so that we can use the network of state oil marketeers, such as Indian Oil,? a heavy industries ministry official told FE.
He added, ?For R&D, it?s a 50:50 shared investment with the industry. We will spend R800 crore on the research projects, and the auto companies will spend a similar amount on setting up manufacturing facilities for electric and hybrid vehicles.?
As a third leg of the new electric vehicle policy, the government will additionally subsidise a buyer by paying 30-40% of the higher price that an electric vehicle commands over those that run on traditional fuels such as petrol, diesel and CNG. Traditionally, electric cars cost 25% more than conventional products because of the high cost of batteries and the low scale of production.
?The subsidy will be on a total cost of ownership model. It currently takes 5-6 years for recovery of the higher price paid for an electric vehicles, we will bring it down to 2-3 years,? the government official said.
This is part of the first phase under the government?s ?National Electric Mobility Mission Plan 2020? that was adopted earlier this year to promote electric vehicles as an eco-friendly transportation option and save as much as R30,000 crore on reduced oil imports. The plan was initially announced by Pranab Mukherjee in the the 2010-11 Budget, after which a Booz & Co study was commissioned that said India can potentially reach sales of over 6-7 million electric and hybrid vehicles by 2020, of which 4.8 million would be two-wheelers. But, the cost of building an entirely new eco-system would be about R22,500 crore.
With ministers from various ministries such as finance, power, urban development, heavy industries and road transport, the National Council is the top advisory body for approving new schemes under the policy. The auto industry is also represented in the council through Siam and companies such as Mahindra.