Understanding the pros and cons of using EVs for your rental fleet

The Government of India intends to promote EVs and hence there are several tax benefits including a lower GST rate of 5% which is almost 8 times lesser than the traditional vehicles.

Updated: Nov 17, 2021 3:35 PM
Image for representational purposes only

Electric Vehicles (EVs) have become sought after for a variety of reasons, including their environment-friendly nature and long-term cost savings offered to users. In fact, India’s EV market, despite being at a nascent stage overall, has been witnessing steady growth in recent years, with an increasing number of consumers taking the EV route and the government introducing policies to facilitate an EV-conducive environment. However, one cannot disagree with the fact EVs come with their fair share of pros and cons.

For instance, these vehicles are currently highly-priced (for example, Tata Nexon EV is currently priced around Rs. 14 lakhs ex-showroom against the traditional combustion engine model priced at Rs. 7.29 lakhs). Hence, a decision to introduce EVs to a rental fleet should be accompanied by a detailed pros and cons assessment.

Riding high on the pros of introducing EVs in the rental fleets, different government organisations including the Municipal Corporation of Pune and BMC have recently decided to increase overall expenditure in procuring EVs as part of official duty vehicles.

The Pros

Fuel Efficiency and Low Maintenance

One of the biggest pros is the fact that these vehicles do not consume fuel as their traditional counterparts. Hence, an organisation can tick a significant amount of expense from the income statement. As compared to combustion fuel-based vehicles, annual maintenance charges are also significantly low. Oil changes do not exist and brake maintenance is also negligible as against traditional vehicles.

Environment Sustainability of EVs

With the customers becoming more aware of the environmental impact of organisations, the introduction of EVs could simply provide companies with a definitive edge over their rivals and could also take account of the concerns of customers on a large scale. Needless to mention, the usage of EVs shall have a positive impact on the environment.

Financial Incentives

The Government of India intends to promote EVs and hence there are several tax benefits including a lower GST rate of 5% which is almost 8 times lesser than the traditional vehicles. Furthermore, income tax benefits up to Rs. 1,50,000 are also available on the first purchase of EV along with subsidy offers differing in various states. Hence, as a corporate decision, the introduction of EVs brings along a variety of financial incentives.

Multiple collaboration options

There are currently 399 EV startups in India. The concept of EVs is largely popular as a universally acceptable model both for corporate and individual users. Hence, if a decision to replace the rental fleet with EVs is undertaken, there could be many opportunities, offers, and chances to be associated with different brands across the country.

However, as we discuss the pros, it’s important to analyze the cons, too.

EVs result in high capital expenditures

As explained in the introduction, consumers might have to shell out almost double the price for procuring an EV with the same features and specifications as a traditional one. Even though the automobile companies are making efforts to bring down total production costs so that the benefits can be transferred to the end-consumers, the total capital expenditure needed to procure an EV is still too high, especially with the traditional options available.

Battery charge duration

The total time taken to charge the battery of an EV depends on its capacity and miles offered. High-end vehicles will undoubtedly take a longer time for getting fully charged. EV infrastructure still has a long way to go to solve the range anxiety among consumers. Due to this, the overall dependability of EVs is often under the scanner.

Lack of infrastructure

Even though governments are trying to improve the availability of charging stations and further increase electricity generation, the presence of merely 1800 charging stations in a geographically large country such as India is not enough to present a strong case for EVs as part of the rental fleet. Hence, there is a need for a stellar public-private partnership to knock down this significant issue in the universal acceptance of EVs in India.

Response to weather conditions

Traditional vehicles running on fossil fuels have shown their efficiency by working in extreme weather conditions around different parts of the world. However, EVs are expected to be more sensitive to such extreme weather conditions, making them a riskier alternative to traditional vehicles.

Bottomline

To sum up, there are both pros and cons of adopting EVs as part of a rental fleet. Any organization deciding in favor or against the usage of EVs should take account of all the factors listed before and accordingly make an informed decision.

Author: Greg Moran, CEO & Co-Founder, Zoomcar

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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