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Developing the infrastructure and market for hybrid and electric vehicles (xEVs) will not be cheap. The price for the Government's ambitious plan is estimated to be as high as around Rs 22,500 crore.
These are the findings of a study by consultant Booz & Co on the potential of the xEV market, which was commissioned by the Society of Indian Automobile Manufacturers and the Ministry of Heavy Industry.
It says that India has the potential to reach sales of over 6-7 million such vehicles by 2020, of which 4.8 million would be two wheelers.
EV mission
This report has provided the basis for the Government's electric vehicle mission, under which it plans a Rs 740-crore Research & Development (R&D) fund in the 12th Five Year Plan and an inter-ministerial panel to monitor the implementation of the project.
“It is impossible to reach this potential without a clear roadmap. To induce acceptance of xEVs among consumers and producers as well as localise production, investments in infrastructure and incentives are required,” states the report.
In India, only Mahindra Reva currently makes electric cars. However, electric scooters are more popular, with around five players in the market led by Hero Electric.
The other carmakers which have xEV technology like Maruti, Hyundai and Tata Motors, have been waiting for a clear policy before taking the plunge.
“An estimated Rs 12,500 – 13,500 crore on the demand and supply side, and Rs 8,000-9,000 crore on R&D and infrastructure across all vehicle segments, clubbed with mandates for xEVs in various Central and State Government fleets could help India reach the estimated potential,” the report states.
This is apart from the up to Rs 45,000 crore in investment needed from the automakers over the next nine years on setting up manufacturing capacities.
“Most of the expenses will be borne by industry. The Government will help by creating the supporting infrastructure like power generation, charging centres, in developing technologies and other tax incentives. Manufacturing investments will have to be done by the specific companies,” said a senior Central Government official.
Returns
The report also claims that the returns on such large investments will also be lucrative.
Earnings across the whole segment are expected to be up to Rs 43,000 crore, with electric two wheelers contributing Rs 28,000 crore and four wheelers up to Rs 7,100 crore.
Such vehicles may also help in reducing the overall dependence on traditional fuels and lowering ambient pollution.
Fuel savings could amount to Rs 14,000 crore in 2020, while carbon dioxide emissions could go down by 1.5 per cent overall.
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