On March 6, the CEEW Centre for Energy Finance — an initiative of the Council on Energy, Environment and Water (CEEW) — released the study ‘Greening India’s Automotive Sector’, which shows how India’s electric vehicle (EV) market has seen remarkable growth. But there are areas of improvement. For example, India doesn’t have an official EV transition target for the automotive sector. Gagan Sidhu, director, CEEW-CEF, shares with FE’s Vikram Chaudhary how can India further catalyse electric mobility. Excerpts:
How has India’s electric mobility transition been evolving?
In contrast to the Indian auto sector as a whole, which has not yet recovered the ground lost as a result of Covid-19, the electric vehicle (EV) segment has been growing from strength to strength. The overall auto sector contracted by about 30% following the onset of the pandemic, but EV volumes contracted only 19%. EVs were quicker to recover, growing from less than 3,000 vehicle sales in FY14 to about 500,000 units in the first six months of FY23. The CEEW-CEF’s Electric Mobility Dashboard, which updates EV volumes on a fortnightly basis, shows they have crossed the 1 million mark in FY23.
But penetration levels are low…
EVs, which accounted for 1% of all monthly auto sales in January 2021, doubled their share to 2% by August 2021 and doubled again to 4% by March 2022. By September 2022, EV penetration had crossed the 5% mark to reach 6.05% levels.
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Which states are leading the EV transition?
The top three states in terms of absolute EV registrations for FY22 and H1FY23 were Uttar Pradesh (165,338), Maharashtra (112,979) and Karnataka (92,690). While 86% of EV registrations were accounted for by e-rickshaws in UP, in Maharashtra and Karnataka it was E2Ws that led, accounting for 84% and 90% of registrations, respectively.
Analysing EV trends from a market share perspective reveals a different picture. Delhi leads the nation with 8.3% penetration, followed by Assam (5.91%) and Karnataka (4.85%).
Karnataka particularly stands out as it features among the top three states on the basis of both absolute EV registrations as well as EV penetration levels.
What are the demand-side incentives supporting EV sales?
There are three sets of policies that incentivise purchases of EVs. Two are applicable nationwide (they operate in tandem with policies in various states). At a national level, there is the FAME-II policy that came into force in FY20 as a successor to FAME-I. It incentivises purchases of 133 specified models of vehicles in the following categories: E2Ws, E3Ws, e-rickshaws, E4Ws and 4W hybrid (commercial only), and e-buses. Of the Rs 85.96 billion consumer incentives budgeted under FAME-II, only 30% had been disbursed as of September 30, 2022. EVs also enjoy concessional taxation treatment. While internal combustion engine vehicles attract GST at 28-43%, only 5% GST is applicable to EVs. As of September 30, 2022, 14 states had EV policies that feature consumer incentives of varying degrees in addition to FAME-II incentives.
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How can we further catalyse electric mobility in India?
First, India must set up an official EV transition target for the automotive sector. At present, there are 2030 targets for renewable energy generating capacity and green hydrogen production capacity, but none for electric mobility. Second, all states should embed consumer incentives in their EV policies. We found that states with such incentives had experienced over 2X growth in EV volumes compared to states without them. Third, states should carefully consider their preferred incentive amounts for EVs. We found that states with higher incentive amounts experienced 4X growth compared to states with lower incentive amounts. Fourth, FAME-II may consider higher per-vehicle incentives for approved models under select categories. We found that the vast majority of E3Ws (including e-rickshaws) have been sold without FAME-II subsidies, resulting in only 12.5% of the E3W FAME-II unit target being achieved.