Sunday 22 March 2015

A View From India

Auto.economictimes.indiatimes.com: According to Mahindra's CEO of their Automotive division PN Shah, a report on Electric Vehicles (EVs) by Deutsche Bank states that EVs will no longer be niche. It also projects a 9% market share being owned by EVs, which is higher than the estimate of 5% by the Indian Government. India has a huge potential for EVs.

Various factors like incessant stop-go traffic, long distance travel, fuel prices, noise and air pollution, stressful driving due to heavy traffic and so on, make EVs a viable solution for Indians.



Globally, there is widespread acceptance for EVs and the benefits that they offer. An EV sale in international markets is growing over 85% YoY and is expected to grow at similar levels. Norway, for instance, has crossed 15% of the total car sales.

China and UK have shown growth rates between 300% - 500% in the last few months. Governments in these countries continue to play a key role in driving higher EV sales, through a stable policy for subventions. These benefits range from tax exemptions, free parking, and home charging station subsidies to public charging.

India has been lacking a stable long-term policy, which has caused doubts about investing, amongst OEMs, Tier-1 Infrastructure & Energy companies. Till date, there are no incentives for the EV industry or for EV buyers from the central government.

However, a few state governments have been quite supportive in providing various incentives. For instance, EV buyers in Delhi enjoy benefits of approximately 29.5% (subsidy of 15%, along with a waiver of 12.5% on VAT and a refund of 2% Road Tax).



The Rajasthan & Chhattisgarh governments have waived off VAT and Road Tax. Maharashtra, Karnataka & West Bengal enjoy lower VAT & Road Tax on their EV purchase. Elimination or reduction of taxes in other states as well will further incentivize consumers to consider electric mobility.

The central government has been working on an EV centric policy to be rolled out under the National Mission for Electric Mobility (NMEM) framework, known as NEMMP 2020 (National Electric Mobility Mission Plan). The NMEM would help implement a plethora of incentives and other initiatives that would help boost the EV industry in India.

The roll out of the NEMMP has long been overdue and its delay is adversely impacting the EV industry. The plan holistically looks at creating demand for Electric Vehicles through introduction of subventions for demand creation, R&D support and infrastructure development.

The total spend in the mentioned areas has been estimated by the government to the tune of Rs. 20,000- Rs. 23,500 crores, to be infused phase wise. Majority of the investments under the plan would be focussed on demand creation.

Specific policies will aim to incentivize the manufacture and early adoption of electric vehicles, further providing impetus for creating the requisite demand for EVs in the country.

Research, Development & Demonstration (RDD) investments of Rs. 1500- Rs. 1800 crores would involve government support to the tune of Rs 980 crores which includes the setting up of testing as well as R&D centres. Balance requirements are estimated to be met by the industry.

The government would provide resources for taking up of RDD in key identified areas through incentives, R&D grants, direct involvement in R&D projects, acquisition of technology and sourcing expertise.

Additionally, various government labs and automotive testing centres will gear up to develop competencies, commit resources and collaborate with the industry and academia for taking up EV related R&D projects within fixed timelines.

Proposed investments for building power infrastructure is approximately Rs. 4,915 crores and charging infrastructure is approximately Rs. 1,225 crores, over a period of 8 years.



Charging infrastructure development would broadly include application of schemes and pilot projects for installation of charging stations or terminals and fast chargers at public areas and various locations.

Further, the government would also ensure standardization of batteries, recharging related components and development of innovative energy delivery models.

According to the NEMMP 2020 report of the government, if the objectives of the plan are met, the likely benefits of the initiative would ensure secured future energy needs through significant savings in liquid fuel consumption.

This will also help in further lowering the import bill of petroleum (estimated total liquid fuel savings to the tune of 2.2 MT - 2.5 MT, which translates to a saving of Rs. 13,000- Rs. 14,000 crores by 2020).

Also, a significant reduction in emissions (between 1.3% - 1.5%) and a net decrease in CO2 emissions on a “well-to-wheel” basis is expected. A growing EV industry in India would in turn also spur the manufacturing sector by cascading larger domestic production of components such as Batteries, Motors and Controllers.

With March 2015 nearing, we are hopeful that the new government’s announcement on subvention within the upcoming financial year budgets would set the dawn of a new age for EVs in India.



With the release of stable long-term subventions, we expect to see public awareness levels rise and the segment getting competitive. More public-private partnerships will take place, which will use the expertise of both parties to develop futuristic technologies.

We also foresee a plethora of mobility related areas being met through niftier technologies in the future, which will not just meet the urban mobility needs but also address public transportation needs such as public buses, feeders and fleet services. With stable and robust incentives through the budget announcement, the Indian EV industry shall grow at large and at par with other global giants such as United States, China and United Kingdom.