2-wheeler firms being asked to junk current plans for a hazy EV future; if that fails to materialise, will govt compensate them?
Given India’s ambitious emission-reduction targets at the Paris climate meet, it is not surprising that the government should have an equally ambitious electric vehicle (EV) strategy. According to the plan, all fresh production of three-wheelers are to be based on electric engines by 2023, and the changeover date will be 2025 in the case of all two-wheelers below 150cc. There was also talk of a certain share of the fleet of taxi operators like Uber/Ola being electric by a certain date, but that seems to have been put on the backburner for now. Given India’s leadership position in the traditional two-wheeler industry—India exports 3 million two-wheelers a year—and how the advantage will now probably shift to countries like China, it is not surprising that the proposal mooted by NITI Aayog has come in for a lot of flak from manufacturers like Bajaj Auto and TVS Motor Company. But, more than that, what is worrying is the near absence of any concrete plan to make the shift, and to even think through the rationale. If the electric power on which these two-wheelers are to run is based on coal instead of gas or solar/wind, all that the move achieves is emission-shifting, not reduction; that is, the emission will not take place in big metros but in the areas where power plants are located. At the outset, then, the government needed to put out information on the emissions that will be saved, if at all.
There is, as yet, no concrete plan to produce enough batteries or to reduce their costs. Bajaj Auto managing director Rajiv Bajaj told The Hindu Business Line (HBL) that there wasn’t one battery manufacturer present at the NITI meeting on this last week; China accounts for around 60% of global battery manufacturing right now. India, in contrast, has very small battery assembly facility and no manufacturing capacity. So, if the plan to go EV is just a few years away, for it to have any credibility, by now leading manufacturers should have started constructing their factories in India. And, as compared to China’s 3-4 lakh public charging stations, India has a mere 150 and has a target of 5,000 in a few years. Since batteries are very expensive right now, and comprise around half the price of an EV, the government should have gone public with how much subsidy will be given each year to make the 2-wheelers affordable. While nothing of the sort has been done, the government is asking two- and three-wheeler manufacturers to prepare for an EV future in just a few years. Given how the current internal combustion engines are so different from EVs, this means manufacturers will have to virtually start over from scratch, redesign their production, come up with new vendors, etc. But what happens if, as they abandon their current production lines, the government is not able to switch from coal-based to clean power, or to get enough battery manufacturers or charging stations, or to fund a big subsidy programme? Will the government compensate manufacturers for the loss in business? Indeed, this talk of a sharply advanced EV schedule will also play havoc with manufacturers’ plans to switch from the existing BS-IV emission norms to BS-VI, since it is possible a large number of buyers will prefer to wait to buy EVs instead. If the government is serious about moving to EVs, it needs to demonstrate this by laying out a concrete plan to get battery manufacturing in India and to detail how it plans to subsidise this. Else, it is just asking Indian manufacturers to trade their leadership position for an uncertain future.