Short on power

The transportation sector accounts for one-third of the total crude oil consumed in the country, with 80 per cent being taken up by road transport alone. That is a good reason, if any is needed, for a switchover to electric vehicles (EVs) which will help reduce the oil import bill and also control emissions. Yet, the FAME schemes, ushered in with much fanfare, have failed to make any impact. India plans to have a 100 per cent EV fleet in public transport by 2030, and will aim for 40 per cent electrification in personal transport by then. However, just 2.36 lakh EVs were sold in the country in FY21, with 60 per cent of these being two-wheelers and another 37 per cent three-wheelers. This is a miniscule 1.27 per cent of the internal combustion engine vehicles sold last fiscal.

The Centre’s FAME II scheme, now valid till March 31, 2024, has given out incentives worth only ₹225 crore so far, against the allocated ₹10,000 crore for the three-year period, triggering amendments in its contours earlier this month. Under FAME II, e-buses, meant to be a focus area, are being procured by States based on least cost quoted per km of operations. In a modification of this scheme, a June 11 gazette notification says: “EESL (Energy Efficiency Services Ltd, a government agency) will go for aggregation of demand in...nine cities (with a population of over four million) for remaining buses under the scheme on opex basis.” For realisation of scale economies as well as simpler contracts, it might make sense for EESL to determine both the technical specifications and operational terms. Financing options for outright purchases by willing state transport undertakings can also be explored.

To encourage mass adoption of cars and two-wheelers, more measures are required. Private four-wheelers which are not eligible for incentives under FAME II, must be brought in. Secondly, cost reduction should be achieved as price still remains an entry barrier for EVs. Fortunately, lithium-ion battery prices — which constitute 25-40 per cent of a vehicle’s cost — have been falling steadily in the last decade. To further bring down the upfront cost, delinking the battery cost from that of the vehicle or battery swapping options can be explored but standardisation of batteries is important for this. The recent PLI scheme for advanced chemistry cell batteries hasn’t come a day too soon. Finally, the charging infrastructure should not be overlooked. FAME II proposes to set up 2,700 charging stations on highways at intervals of 25 km. While the in-principle nod was given in early 2020 for 2,600 stations, private players need to feel assured of demand to meet capex costs. Improving EV adoption and the charging ecosystem should go hand in hand. It’s not a chicken and egg story.

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