By Sameer Aggarwal
Electric vehicle sales in India are rising fast. The increasing pace of EV adoption will see a further boost with easy and affordable consumer choices with better and innovative financing options.
To achieve our climate change targets, Electric Vehicles (EVs) have to be the future of the Indian mobility ecosystem. With world economies reducing their reliance on traditional fossil fuels, there has been significant market interest in EVs in India too. The most evident shift is that these vehicles are becoming cheaper and more convenient by the day. While EVs are not new to the mobility market, their rapid adoption in the last few years is promising. This change is more pertinent from the environmental aspect, as almost 80% of the total greenhouse gas emissions in India are from the transport sector alone.
A rapid shift to EV and efforts of the government
With the push from the Centre and the state governments, the EV market in India is set to shine. In an effort to free India from emissions and decarbonize the economy, the government has also begun promoting the sales of EVs through policy changes by its departments and subsidiary organizations – it is significant to note that the government departments are now electrifying their own fleet. India has made a set of commitments to the environment, whether it is the goal of achieving 50% renewable power by 2030, introducing hydrogen as a clean fuel or coming up with new carbon financing models.
A prominent shift at the moment is the recent push to adopt an EV fleet. As per statistics, 1,725 electric vehicles have already joined the government’s own fleet, leading to a reduction of 13,230 tons in carbon dioxide emissions and an overall 1,852 kg reduction in particulate matter. In a landmark achievement, about 6 crore green kilometres have been covered by these government vehicles.
Leasing an internal combustion engine sedan car costs roughly Rs. 40,000 a month for three years, while the fleet being outsourced from the government’s nodal department under the ministry of power incurs almost the same cost over six years. The intent of the government became evident when Union Minister of Road Transportation and Highways Nitin Gadkari visited the Parliament in a hydrogen-powered Fuel Cell Electric Vehicles Toyota Mirai. This vehicle uses electricity to power its motors, consumes hydrogen fuel, and emits only water vapour.
Dynamic financing models boost EV adoption
The Department of Heavy Industries under the Government of India had introduced a scheme called Faster Adoption and Manufacturing of Hybrid Electric Vehicles (FAME) under the National Electric Mobility Mission Plan 2020, wherein subsidies to the tune of about Rs. 15,000 per KWh is being provided for EVs. The ultimate aim of this scheme is to make EVs more affordable.
Under this scheme, a total outlay of Rs 10,000 crores has been kept aside for three years, starting from April 1, 2019. Under FAME (Phase 1) about 2,80,987 hybrid EVs are being subsidised, while Phase 2 focuses on the electrification of 70,000 busses, 5 lakhs electric three-wheelers, 55,00 electric four-wheelers and 10 lakhs electric two-wheelers. Obtaining the subsidy is simple and easy – the consumer doesn’t have to get involved in any technicalities.
All prices being offered by dealers have the subsidies subtracted. After concluding the sale, the manufacturers directly draw the money from the government by providing sales credentials and consumer information. Today Uttar Pradesh, Maharashtra, Tamil Nadu and Delhi are the top four states with a significant number of EV sales.
In addition, the private sector is also leaving no stone unturned to spur EV adoption, offering innovative financing options to buyers with easy loan options. These companies are offering loans to people from Tier 2 and 3 cities without any credit history positioned at the lowest end of the pyramid. These loans are either provided through their own Non-Banking Financial Companies or through a chain of lending partners.
In order to make the loans more secure, biometric and psychometric assessments of loan-seekers are being done by these companies, which evaluate and predict their intention to repay the loan. This is a new and innovative model, which has never been tried before. Here, psychometric tests and psychological personality assessments of an individual dig out their core characteristics and willingness to act honestly towards repaying the loans. Their questionnaire comprises situations wherein a positive and a negative response has to be submitted in a given situation that chalks down an individual personality.
Increased affordable consumer choices in the EV segment
India’s EV revolution is at a firing pace, wherein 3-wheeler electric vehicles are dominating the market. From e-rickshaws to e-autos, the revolution is going to be three-wheel drive. At an affordable cost of anywhere between Rs 1 lakh to Rs 1.5 lakh, these three-wheelers account for about 65% of the total electric vehicles being registered in India today. Two-wheelers make up the market registration share of about 30%, while four-wheelers stand at a low 2.5% share.
Since the launch of the FAME scheme in 2019, where a target of 5 lakh electric three-wheelers was set by the government, a whopping 4 lakh vehicles have already been subsidised and are plying on roads. As per Government of India statistics, a wide variety of nearly 112 models of electric vehicles are available in the market for subsidy under the FAME-2 scheme, which includes three, two and four-wheeler vehicles.
The EV registration data shows that Assam, Delhi, Bihar, West Bengal and Uttar Pradesh comprise 80% of the total electric three-wheeler registrations, with Uttar Pradesh alone accounting for close to 40% of them. The figures are probably much higher, given the fact that many e-rickshaws ply without registration plates.
A futuristic outlook on EVs
With the government’s policy push and robust subsidy schemes, EVs are paving the way for cleaner automotive technologies. The future will be driven by electric technology, with 3-wheelers in India dominating the forefront. Innovative financial models from private companies are an added benefit that will step up the trend further.
Also Read: India needs to reskill its workforce for the electric vehicle industry. How to do that?
(Sameer Aggarwal is the CEO and Founder, RevFin.)
(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)
