Over the past two to three years, the government has been increasingly advocating electric mobility with the aim to have 30 per cent electric vehicles (EVs) by 2030. India’s commitment to reduce its carbon footprint and the alarmingly high pollution levels in several parts of the country are the biggest factors for leveraging EVs. It is expected that the EV programme will complement India’s renewable energy growth plans as EVs can be leveraged to balance the grid. With a transition towards electric mobility, crude oil imports can be reduced, thereby leading to significant savings in the import bill. However, the cost of EVs is substantially higher than that of conventional internal combustion engine vehicles due to the high cost of batteries. This makes EVs a less preferred choice from the end-user perspective and, therefore, these at present constitute a small share in the total automobile market. However, going ahead, EV penetration in the country is expected to increase on the back of progressive government policies and growing market participation. At a recent India Infrastructure conference on E-mobility and Charging Infrastructure, Abhay Damle, Joint Secretary, Ministry of Road Transport and Highways, spoke about the government’s policy measures to promote the EV segment. Excerpts from his address…
There is a need to set up an ecosystem that recognises the role played by EVs. The whole intent behind going electric is to reduce carbon dioxide and other harmful emissions (NOx, SOx and particulate matter) by the transport sector. This is not merely a city-specific or location-specific issue, but a global one. India has made commitments to reduce carbon emissions by 2030 and EVs will help in reducing not only emissions but also the import of crude oil. We need a three-pronged strategy for promoting electric mobility in the country – setting up good charging infrastructure, ensuring that original equipment manufacturers (OEMs) are willing to roll out EVs, and encouraging consumers to buy these EVs.
Charging infrastructure
Well-developed charging infrastructure is crucial for the expansion of EVs in order to give confidence to users to switch to these vehicles. There is a need to set up multiple charging stations as EVs take about 30 minutes to charge and fewer charging points may lead to long queues of vehicles. Globally, the charging infrastructure in the public domain is not used more than 10-15 per cent of the time and almost 85 per cent of the charging is done at home. However, good charging infrastructure is relevant from the user’s perspective. While the government will not get into the setting up of charging infrastructure, it will formulate policies and regulations to encourage it.
India sells about 3.5 million cars and 20 million two-wheelers a year. Even if we consider replacing 5 per cent of the vehicles by EVs four years down the line, we are looking at about 200,000 vehicles going electric every year. In order to supply power to these EVs, there is a need to set up 20,000-30,000 charging stations every year across the country. Although the initial utilisation of these charging stations will be on the lower side, the expected increase in EVs in the coming years will lead to higher uptake.
The government might just set up the initial nucleus of the charging stations in order to kick-start the process. In this context, the National Highways Authority of India (NHAI) is formulating a highway nest policy and one of the elements of the policy is the setting up of charging infrastructure. In the near future, there will be a huge potential for private sector participation in the charging station space.
The Ministry of Power (MoP) has also provided clarity on issues related to the setting up of charging stations – charging activity does not entail the resale of electricity and setting up a charging station does not require a licence (as per the provisions of the Electricity Act, 2003). Further, the MoP has proposed the creation of special tariff categories for charging stations.
Focus on OEMs
Another key aspect of the electric mobility ecosystem is the need to stimulate the production of EVs. The need of the hour is to create a system where OEMs are motivated to manufacture EVs and this is being done by tightening the fuel efficiency norms. We have also introduced corporate average fuel efficiency or CAFE norms, which apply to all vehicles that are manufactured by a particular OEM and aim at improving fuel efficiency by 17 per cent by 2022. This is a difficult feat to achieve since it requires considerable engineering and will result in a subsequent increase in costs. This is expected to propel OEMs to switch a part of their production to EVs as only then will it be possible for them to meet the tightened fuel efficiency standards.
While all over the world there is greater focus on electric cars, in India, the emphasis is on electric three-wheelers, e-autos and e-buses. Also, globally electric mobility started with high quality and high costs but in India, we are looking at ways to reduce the cost of electric mobility. Although the capital cost of EVs is very high, if we consider the total cost of ownership, it can be justified. Also, taxing conventional vehicles at higher rates vis-à-vis EVs is not the right strategy. Pricing should be market determined and OEMs should work on cost reduction through greater localisation and indigenisation.
Demand creation
The reason why EVs are not being manufactured on a large scale in the country at present is because of a lack of buyers. Consumers need to be encouraged to buy EVs through incentives such as priority parking and exclusive entry to congested areas, as is being done globally. The ministry is taking several steps in this direction. For instance, in order to give EVs a distinct identity, the ministry has started providing them green number plates. The distinctive number plates will enable easy identification of EVs, which will allow preferential treatment in parking and free entry in congested zones among other proposed benefits such as concessional toll charges. Further, we are planning to ask transport operators, fleet operators and cab aggregators to introduce EVs in their vehicle fleet on an incremental basis, say, 2 per cent annually. A similar approach was followed in the renewable energy segment with a minimum specified percentage of electricity being procured from renewables and today the sector has grown tremendously.
The government has also removed the permit requirement for all EVs as this was a barrier to entry into the market. Earlier, the move was applicable only to e-rickshaws and it led to their mushrooming. However, the permit exemption does not mean that the vehicle does not have to be registered.
The way forward
I feel that things will move faster once a robust battery regime kicks in. Currently, there are impediments in the battery and storage solutions space. The available technology is being applied to vehicles and a technological disruption is yet to happen. There is a need for major technological innovations and disruptions in the electric mobility segment to increase the growth momentum.