Time for India to shift gears in EV journey: ‘Centre must set achievable, time-bound targets’

In western India, Rajasthan offers subsidies for electric two- and three-wheelers depending on the vehicle's battery capacity. Gujarat aims to have at least 200,000 EVs on the road in four years, with a total budget of Rs 870 crore.

September 6, 2021 4:07 PM
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Though it might not reflect on the road, India has come a long way since 2015 in electric mobility. At least 17 states have adopted EV policies so far, with Odisha being the latest entrant. The state set itself a target of ensuring EVs make up at least 20% of all new vehicle registrations by 2025. In western India, Rajasthan offers subsidies for electric two- and three-wheelers depending on the vehicle’s battery capacity. Gujarat aims to have at least 200,000 EVs on the road in four years, with a total budget of Rs 870 crore.

The latest amendment to Maharashtra’s EV policy aims to bring at least 1,46,000 EVs on the road by 2025. They will incentivize 100,000 e-two-wheelers, 15,000 e-autos, 10,000 cars and 20,000 goods carriers. The state also aims to electrify at least one-fourth of its intra-city bus fleet in urban areas, including Mumbai, Pune, Nagpur and Nashik.

The private sector has also shown tremendous interest, with traditional automobile OEMs, oil and gas companies, and new startups investing in the EV sector. More than 500 startups are working on improving electric mobility and have raised more than $700 million in the last three years. These startups range from developing better batteries to setting up low-cost charging infrastructure to assembling vehicles.

Despite the headway made, 6.38 lakh EVs were registered in India since 2012 – which is 0.88% of the total vehicle population. Therefore, strong policy measures accompanied by bold regulatory reforms are needed to get more EVs are on the road.

Phase-out ICE vehicles: Current schemes and policies are all designed to incentivize the purchase of EVs. In addition to this, it is time for India to begin phasing out vehicles running on fossil fuel through time-bound targets. Several governments across the globe have already set long-term targets to phase out ICE vehicles.

In India, it is crucial to bring out these long-term strategies at the earliest. Time-bound implementation of these policies would allow the country to become a global EV leader. Moreover, as economies of scale grow, costs will come down anyway, and EVs will become competitive, reducing the need for these incentives.

Utilization mandates: Every state needs to develop targets for electrification both in the short and long term. To begin with, electrification of three-wheelers, buses and commercial fleets need to be mandated. Furthermore, Trucks, tractors, and other commercial should be electrified in a phased manner. Governments, at all levels, should lead the way and come up with a concrete timeline to electrify their fleet. These measures will increase EVs on the road and incentivize private players to set up charging points. Andhra Pradesh state government, for example, is procuring 25,000 electric two-wheelers to lease to its employees.

Incentivize buying: Front-end consumer incentives provide the strongest promotion at the beginning. Schemes that provide subsidies in purchase costs tax exemptions address the hesitancy associated with new technology. Apart from purchase incentives, the Centre and state governments should address this by offering sweeter scrappage policies for old ICE vehicles in exchange for new EVs and non-fiscal incentives like free parking and reduced tolls on highways.

Ensure market supply: Setting time-bound mandates to vehicle manufacturers to increase their EV production will ensure that the supply meets market demands. The mandatory targets will push manufacturers to invest in research to develop technologies best suited for local and regional markets. A zero-emission vehicle (ZEV) credit program, much like the carbon credits given to hard-to-abate industries, will ensure the overall growth of EV stocks, even if some manufacturers cannot meet their EV production target.

Designate EV as a priority lending sector: Currently, loans for ICE vehicles are relatively easy to get with lower interest rates as the vehicle’s value is well-understood, making loans secure for the bank. However, this is not the case with EVs, as their residual value is not clear. Therefore, the Centre should designate EV as a priority lending sector, especially financing for commercial fleets, as they are critical to the transition towards cleaner mobility. This means lower interest and longer tenures to make it easier for the consumer, ultimately leading to faster uptake of cleaner vehicles.

Ensure robust EV charging network: An efficient rollout of EV charging infrastructure for a young EV market needs to increase the number of accessible charging points. The distributed provision of many standard power charging points, supplemented by a small share of direct current (DC) charging points, can ensure that EV charging needs are efficiently met.

The ongoing pandemic and the spate of recent extreme weather events are a grim reminder of the consequences of climate change. Electric vehicles, especially LEVs, are best placed for India’s post-Covid green recovery. For this to happen, phasing out ICE vehicles is equally important. Several automobile manufacturers have already announced their global deadlines to produce only EVs. However, the Centre must set achievable, time-bound national targets to phase out ICE vehicles and hasten the adoption of electric vehicles.

Authors: Pawan Mulukutla, Director of Electric Mobility, World Resources Institute India, and Madhav Pai, Executive Director, WRI India Ross Centre For Sustainable Cities

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

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