GearinG up for long road ahead

Sanjay Khurana

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) Scheme was operationalised in 2015. According to a NITI Aayog report, much has changed since. The transition towards electric mobility has accelerated, more products are available, charging stations are being set up, and there is growing awareness about electric vehicles (EVs) among consumers.

The FAME II policy was introduced in 2019 for faster adoption and manufacturing of electric vehicles, but experts are unanimous that the ease and speed of the electric mobility transition will require active participation from industry. The EV four-wheeler market is looking up, but there’s still a long road ahead to gain consumer confidence.

“Tata Motors dominates the electric four-wheeler segment with almost 75 per cent market share,” says Sameer Thakur, Group General Manager, Berkeley Tata, Chandigarh. “As far as numbers are concerned, Tiago has a larger market share because of its pricing, but Nexon is also quite popular as it comes with more power and mileage.” Tata Motors also sells Tigor in the EV variant.

According to Thakur, as far as Chandigarh is concerned, around 100 electric cars are sold in a month on an average.

Man Singh Bhatia, Development Officer with the National Insurance Company Limited, says the reason for the low adoption of electric vehicles, especially in the four-wheeler segment, is the high acquisition cost and insurance premium as compared to conventional vehicles.

“The cheapest electric car, the recently launched MG Motor’s Comet, is priced at Rs 8 lakh onwards whereas a large number of cars sold in the Indian market are priced between Rs 5 lakh and Rs 7 lakh. The lack of adequate charging infrastructure is also a major impediment,” he adds.

48,105 Number of electric four-wheelers sold in FY 2022-23

6,178 Number of EVs sold in April this year

7,650 sales figures for may

903 In June this year (as on June 5)

Source: Society of Manufacturers of Electric Vehicles

Another insurance industry veteran, having over 25 years of experience, says the penetration of EVs is only 2-3 per cent even in super luxury brands such as Volvo, BMW, Audi and Mercedes.

The e-push

Globally, the lack of variety in the EV segment has been blamed for weak adoption because consumer preferences vary significantly. Moreover, auto dealers are not well-trained to sell EVs or they discourage it as conventional vehicles offer higher after-sales revenue due to maintenance and servicing costs.

The original equipment manufacturers (OEMs) and dealers, industry insiders say, need to collaborate to increase customer awareness about EVs, with a focus on more research and development for Indian conditions.

As battery is the core of an EV’s lifecycle performance and safety, ensuring the use of high-quality batteries is key to the long-term growth of the EV market in India. There is a demand for regulatory bodies to set standards for battery quality based on multiple criteria such as lifecycle, energy density, safety and recyclability.

Electric vehicles are often seen as having significant logistical challenges around the charging infrastructure, particularly for those living in flats/apartments and high-rises without easy charging access. Setting up fast-charging stations at multiple locations (even in residential societies) can go a long way in promoting the adoption of EVs.

Incentives for sellers, buyers

India accounts for approximately 5 per cent of the global production (in units) in the cars and commercial vehicles segment. The auto industry contributes 49 per cent to the overall share from the manufacturing sector to the national GDP and employs nearly three crore people, both directly and indirectly.

At present, electric vehicles command a price premium over conventional vehicles. Besides providing incentives in the shape of subsidy to consumers, tax incentives to the industry, it is felt, can accelerate the production and adoption of EVs. Various state governments and UTs have come up with EV policies to incentivise sales.

Availability of finance

As the cost of ownership of an electric vehicle is fairly higher than a conventional vehicle, availability of finance at reduced rates (than normal auto loans) could play a major role in boosting the sale of EVs.

Some private banks give a rebate of up to 0.30 per cent on auto loans for electric vehicles. However, public sector banks don’t offer any discount on loans for electric vehicles.

Section 80EEB of the Income Tax Act allows an individual taxpayer to claim deduction of up to Rs 1.5 lakh on interest paid on a loan taken for an electric car, subject to certain conditions.

Master app on cards

To boost the adoption of EVs and ease the range anxiety among customers, the Centre plans to develop a master app to check the real-time availability of charging slots nearby. The project is being funded by the Asian Development Bank and will be fully owned and operated by the Government of India.

5,254 charging stations

As of January 23, 2023, India had 5,254 public electric vehicle (EV) charging stations to cater to a total of 20.65 lakh EVs, as per data revealed in the Lok Sabha by Power Minister RK Singh and the Vahan dashboard.