INDIA’S Electric Vehicle (EV)odyssey is moving in two different directions. Let’s look at it slice by slice. The first was a major policy pronouncement by the Government on March 15, wherein a new $500-million EV Policy was approved. What it offered was multiple incentives to lure global EV companies to invest in India and prepare the ground for India to become a global hub for EV manufacturing.
One of the highlights of the policy was that companies setting up manufacturing facilities for EV vehicles in India would get to import a limited number of cars at lower customs/import duty of 15 per cent on vehicles costing $ 35,000 and above for five years from the date of issuance of the approval letter by the Government. At present, cars imported as completely CKD (completely knocked down) units would have to pay duties ranging from 70-100 per cent, depending on the engine size and cost.
That was one of the main downers as far as Tesla was concerned and one reason why Elon Musk kept away from his manufacturing ambitions in India all these years, but the new EV policy completely changes the matrix and it is more or less certain that Tesla will not only manufacture in India but is also going to set up a battery plant in this country. While Tesla has undoubtedly benefited from the policy, which was the objective of the government, the general belief is that a more inclusive policy would have attracted global EV manufacturing to India. Of course, it goes without saying that is also a thumbs up for green energy, reduction of oil imports and urban pollution.
Now to the other slice. According to a piece in the Economic Times on March 13, ‘’electric car sales in India fell to their lowest level in five months in February even as companies took steep price cuts, indicating it would take more than just a lower acquisition cost to nudge buyers to shift to EVs in India where automakers are committing billions of dollars for the switch to electric mobility. Cumulative sales in February dropped to 7,277 vehicles, the lowest since October, according to data from the government’s Vahan portal. So far, this month, EV registrations have fallen to to 204 units per day on average, the lowest in 11 months, signalling that the softening of sales is set to continue.’’
So there we are, juggling with an expanding EV ambition and a market that is depreciating both in India and globally. There are many reasons for this, foremost being the constant and nagging fear of range limitation. There is a shortage of chargers across India’s vast network of roads, so no one wants to risk being stranded. Add to this is the high cost of EV vehicles and the debilitating cost of replacing batteries when it runs dry at the end of five to six years. At present, it costs a whopping Rs 5-5.5 lakhs.
That’s one reason why hybrids are so enormously popular in India and globally. Infact just as EV sales have slowed down, hybrid offtake has skyrocketed. It gives you the luxury of mileage, and peace of mind in that you seamlessly switch between rechargeable and petrol with no fear of being stranded. At present a hybrid in India has a waiting period of no less than 90 days at the very minimum.
Which brings us to the third and last slice of this story. Automobiles are in an evolutionary process. EVs, hybrids, and rechargeable hybrids are all part of the process as vehicles move from the ICE(internal combustion engine) to the hydrogen—clean and green energy— format over the next decade. We are at just about the beginning of the evolution and there will be plenty of pain points along the way.
