India needs to step up its electric mobility drive

Neeraj Gupta | Updated on December 27, 2019 Published on December 27, 2019

Over the last 10 years, government schemes, including FAME, have had little impact on the sales of EVs   -  istockphoto

India adds 30 million vehicles annually and has over 300 million vehicles on roads across the country. At the current growth rate, we are staring at doubling these numbers to over 600 million by 2030.

Not only are we the fastest growing economy in the world, but also the third-largest carbon-emitting country that accounts for 7 per cent of global carbon emissions. As a nation, we are facing a dichotomy of growth at the cost of climate change. By signing the Paris Agreement in 2015, India has shown its commitment to growing responsibly, which is a herculean task. New Delhi announced its climate goal of reducing the emission intensity of the country’s GDP by 33-35 per cent by 2030, from the 2005 level.

EV adoption

With the increasing number of vehicles and rising air pollution, we are undoubtedly heading for a major environmental issues. In the wake of a looming crisis, we need to take immediate and stringent measures. One giant step in that direction is electrifying vehicles. The promotion of electric vehicles (EVs) needs intervention at four levels: Reducing the cost of EVs, longer battery life, adequate charging infrastructure, and incentivising faster adoption.

Over the last 10 years, government schemes, including FAME, have had little impact on the sales of EVs. The segment grew three-fold to 3,600 units in 2018, but still accounts for about 0.1 per cent of the 3.3 million diesel and gasoline cars sold in the country during the period. In comparison, China’s electric car sales rose 62 per cent to 1.3 million vehicles in the same period.

Recently, the GST Council reduced tax rates from 12 per cent to 5 per cent on EVs and from 18 per cent to 5 per cent on EV chargers. While the intent is laudable, we will need to do more to ensure a significantly higher adoption of EVs to move the needle.

Ride-sharing model

The emergence of the ride-sharing economy can play a significant role in triggering the switch to an EV-dominated market, opening up new vistas for the auto and mobility industry.

In a ride-sharing economy, the availability of a vehicle depends upon the rate that a supplier can charge or a passenger can pay in the market. This ‘rate’ or tariff is based on factors such as the cost of the vehicle, fuel price, maintenance and utilisation. Any change in this mix can lead to a change in the tariff, thereby destabilising the fine balance between demand and supply.

If one assumes that the current rates charged by operators of internal combustion engine (ICE) vehicles have reached an equilibrium, EV adoption must be highly incentivised to ensure competitiveness to existing prices.

Linking the use of EVs to CSR projects and the implementation of a carbon credit policy at the micro-level will see increased participation from corporates. Simple policies for setting up of charging infrastructure at commercial places will build confidence in operators to prioritise EVs. Till such time the ease of charging does not match that of a fuel station, driving EV sales will continue to be a challenge.

Disincentivising the purchase and use of ICE vehicles can play a significant role in not only decongesting our cities but will also boost the sales of EVs in the future. Making an EV mandatory in all commercial and residential projects and restricting the movement of ICE vehicles are only some of the initiatives that the policymakers need to make to create the required momentum.

India has the dual responsibility of ensuring growth while reducing green-house emissions for the survival of our future generations, which will require a quantum leap in efforts. Small initiatives in driving electric mobility can pave the way for creating a sustainable society!

The writer is founder and MD, Meru Mobility Tech

Published on December 27, 2019
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