Electric cars vs diesel, petrol, CNG: Costing conundrum decoded

The Budget is likely to provide Rs 800 cr to subsidise electric cars, a move the government expects would cut carbon dioxide...

By: | Updated: March 21, 2016 12:38 PM

Union Budget, Electric cars, Electric cars subsidy, National Electric Mobility Mission Plan, Maruti Suzuki Alto 800

A full charge of the e2o, which takes five hours when the car is plugged into any 15 amp point, lasts 100 km. It consumes 10 units of power per charge.

The Budget is likely to provide Rs 800 cr to subsidise electric cars, a move the government expects would cut carbon dioxide emissions by about 1.5 per cent by 2020. It’s a good idea, but is it feasible in the current Indian context? Electric cars are still extremely rare on Indian roads; can a subsidy change that? Sharmistha Mukherjee gives the facts.

ELECTRIC BASICS

PRICE: The Mahindra e2o, which started off as the Reva before its manufacturer, Reva Electric Car Company, was acquired by Mahindra & Mahindra in 2010, is India’s flagship electric car, and sells in several countries abroad. The base variant of the e2o is priced at Rs 5.96 lakh ex-showroom in Delhi; the premium variant at Rs 6.82 lakh.

There is a 15 per cent state government subsidy on the price, a VAT refund of 12.5 per cent, and a 50 per cent discount on road tax, bringing road tax to 2 per cent.

Electric-cars

Also, the Budget is expected to propose a 35 per cent subsidy on the price differential between an electric and a petrol vehicle, capped at Rs 1.2 lakh. Which means that if a customer in Delhi chooses the base variant of the electric vehicle (Rs 5,95,657) over, say, the cheapest variant of the Maruti Suzuki Alto 800 (Rs 2,82,435), the government will chip in with 35 per cent of the difference (Rs 3,13,222), or Rs 1,09,628.

If existing incentives provided under the National Electric Mobility Mission Plan remain, the price will come down further. The price includes the cost of fixing a charging point at the buyer’s home.

RANGE: A full charge of the e2o, which takes five hours when the car is plugged into any 15 amp point, lasts 100 km. It consumes 10 units of power per charge.

AVAILABILITY: Currently in Delhi, Mumbai, Pune and Bangalore. Needs servicing once a year, at home.

QUESTIONS

COST: Running costs are lower, but the higher buying cost, government subsidies notwithstanding, is a disincentive to picking an electric vehicle over a petrol or diesel one. In the past, sales have suffered as soon as subsidies have flagged, indicating the desire to go green does not yet drive the Indian consumer.

RANGE: The inability of the car to last long drives is a key weakness. While the e2o’s lithium-ion batteries can in theory be charged anywhere, charging takes time, and there are virtually no public charging points in India yet. The range of the car then is a crippling defect, and makes it seem suitable only for short city drives.

INFRASTRUCTURE: Some argue that when electricity grids in India do not even have the capacity to power households, how can they be expected to power a large population of electric vehicles? For electric vehicles to emerge as a viable alternative, India must first work on power generation and transmission, experts say.

HALF-GREEN: The car may be electric, but the power plants producing the electricity are largely coal-fired, raising questions about the car’s real environmental cost. “Electric vehicles are only as green as the energy sources used to charge them. Charging electric vehicles in India remains a challenge as 60 per cent of electricity is generated from coal-fired power plants,” says a YES Bank report prepared in association with Teri BCSD.

Mahindra & Mahindra counters that even if the e2o is charged from the grid, its carbon dioxide emissions are at least 30 per cent lower than a fossil fuel-powered vehicle. Also, the car can harness solar energy to charge itself.

AWARENESS: The Indian consumer probably looks at costs harder than consumers elsewhere. He isn’t too interested yet in the benefits of a green car, nor in his responsibility to help make the planet greener. This is unlikely to change quickly.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.