Poor consumer interest and lack of infrastructure pose big challenges to the government's plans to electrify all vehicles sold in India by 2032, according to BMI Research.
Poor consumer interest and lack of infrastructure pose big challenges to the government’s plans to electrify all vehicles sold in India by 2032, according to BMI Research. In order to woo buyers, incentives on electric vehicles will have to be significantly scaled up, the market research firm said, while adding that the proposed policy will put at risk capital investments made in developing and localising hybrid vehicle technology in India. Last month, the government’s think tank, Niti Aayog had suggested sweeping policy changes over a 15-year period to encourage wider adoption of electric vehicles (EVs). It had envisaged that by 2032 all new vehicles sold in India would be powered by electricity. The proposed plan to electrify all new vehicles sold in the country by 2032 will face challenges in the form of weak consumer interest in these vehicles and a lack of charging infrastructure, BMI Research said in a statement. “We believe that a lack of consumer interest in EVs will pose a challenge to achieving the goal of electrifying all new new vehicles sold in India,” it said. At present, under the Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme the government offers Rs 795 crore incentives on purchase of hybrid and EVs.
“Despite this, by November 31, 2016 only Rs 170 crore had been used since the programme’s inception in April 2015,” BMI Research said. Citing Society Of Manufacturers Of Electric Vehicles (SMEV) data, it said that India’s EV fleet size is estimated at around 4 lakh vehicles, 95 per cent of which are electric scooters. Total EV sales account for less than 1 per cent of the India’s total vehicle population. This is far short of FAME’s goal of selling 7 million units of clean energy vehicles by 2020, it said, adding mass-arket adoption of EVs on the scale the government hopes to achieve will be a major challenge.
“Therefore, we believe that the government will have to significantly scale up incentive on EVs to make them more attractive to buyers over the coming years,” BMI Research said. Besides, it said capital requirements to create charging infrastructure required to meet the demands of mass market EV adoption will be another challenge. The research firm further said there’s lack of details about capital investments for setting up charging infrastructure and how the government intended to fund them. “There are few details about the size of the capital investment required to set up the charging infrastructure or whether the government will seek to incentives stakeholders, including automakers and retailers, to contribute to these set-up costs,” it said.
Niti Aayog had proposed setting up battery swapping stations and using tax revenues from sales of petrol and diesel vehicles to set up charging stations. Flagging concerns over the fate of hybrid vehicles as a result of the proposal to promote only EVs, BMI Research said it “will place capital investments in developing and localising hybrid electric vehicle (HEV) technology at risk”. “We expect that if implemented, it (the policy) will lead to reduced local development and investments into HEVs in the Indian autos market,” it said. The plan will make it harder for automakers which sell hybrids in India to invest in localisation and will see them reconsider future production launches, BMI Research added.