Wednesday, October 4, 2023

Are electric vehicles in India going to be cheaper?


Are electric vehicles in India going to be cheaper in coming days? Likely yes.

Three state Governments, namely of Gujarat, Maharashtra and Uttar Pradesh is considering purchase incentives. This will come in line with the Central Government’s EV policy that provides direct subsidies to the electric vehicle buyers.

Apart from these three states, Madhya Pradesh, Odisha and West Bengal too are considering similar policies for electric vehicles. However, they are yet to initiate any firm discussions so far.

If implemented, these purchase incentives will be offered by the state Governments on top of the subsidies offered by the central Government. This will certainly make the electric vehicles in India cheaper than their current pricing, resulting in promoting the electric mobility further.

All these three state Government have already in discussion with the industry experts and electric vehicle manufacturers to seek their views on the under consideration policy. Interestingly, the development comes on the heels of the Delhi Government’s Electric Vehicle Policy 2020, which proposes to subsidise the electric vehicles through a feebate structure.

So far, 10 states have already announced respective EV policies. However, the demand-incentives have been rolled out only by the Delhi Government. Under the Delhi Government’s feebate structure, polluting fossil-fuel-powered vehicles shall pay cess in terms of fuel surcharge, road tax and congestion fee. These extra burdens of taxes will encourage the consumers to buy electric vehicles, promoting green mobility.

According to a report, after the Delhi Government announced its EV policy, the other state Governments are scrutinizing their own EV policies to see what went wrong, what more they can do to promote the electric vehicles.

State of Electric vehicles in India

Hyundai Kona EV electric vehicles in India

State of electric vehicles in India is yet to accelerate despite the interest among the consumers and the Government’s willingness to promote electric mobility. The major automakers still shy away from launching the electric vehicles in India, as the prices of the EVs are significantly high enough compared to the conventional fuel-powered vehicles.

The lack of charging infrastructure too is another major concern for the automakers and consumers, fuelling the range anxiety.

In the passenger vehicle segment, Tata Motors, Mahindra & Mahindra, Hyundai, MG Motor have their respective models like Tata Nexon EV, Tata Tigor EV, Mahindra e-Verito, Hyundai Kona EV and MG eZS. Mercedes-Benz too has launched the EQC electric SUV in India on 8th October 2020.

In the three-wheeler passenger and commercial vehicle segments too couple of automakers like Piaggio have their presence. The presence of electric vehicles in the four-wheeler passenger carriers segment is minuscule.

The two-wheeler segment, however, has a large penetration of the electric vehicles. While there are several startups working in this space, Bajaj Auto, Hero Electric has already launched their respective products.

So far, the two-wheeler and three-wheelers are the two segments where EV penetration has seen a bit of success in the last couple of years.

EV policies in India

Maharashtra and Uttar Pradesh, two states with a significantly high number of vehicle registration numbers have announced their EV policies back in 2018, in proposal mode though. However, those proposals never took off. Gujarat Government has announced its draft EV policy in September 2019, but the final policy is still awaited.

States like Andhra Pradesh, Karnataka and Tamil Nadu have their respective EV policies to attract the electric vehicle manufacturers to set up plants. These states have announced subsidised land, capital, water and electricity among other benefits for the EV manufacturers.

The central Government subsidises the electric vehicles in India for the buyers under the second phase of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles or FAME-II scheme. These benefits are directly linked with the battery size of the vehicles.

The FAME-II focuses on public transport vehicles more instead of personal vehicles. When it comes to personal vehicles, FAME-II subsidies are limited to two-wheelers and offers Rs 10,000-Rs 20,000 benefits per vehicle.

Meanwhile, NITI Aayog has proposed $4.6 billion incentives for battery makers to promote the electric mobility and electric vehicles in India.

So far, the Delhi Government’s EV policy has been hailed as the best policy by the experts. The Delhi EV Policy brings the cost of electric vehicles closer to the combustion engine vehicles. Other states have announced policies to attract the EV manufacturers, but there are little efforts to drive the demand, resulting in little progress.

Also Read: Tesla in India: Key facts you need to know

Team AFT
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