Government seems to have taken a U-turn, saying “there is no need for any policy now” regarding electric vehicles, despite 2030 all-electric target
India on road to electric car future but roadblocks remain
Tata Motors, one of India's biggest homegrown car makers, this month at the glitzy Auto Expo held in Delhi, unveiled several electric vehicles. These included an electric saloon, a small electric passenger van designed to replace autorickshaws, and a 12 metre long electric bus, part of the country's efforts to boost energy security.
“The shift to electric vehicles will reduce dependence on oil imports and promote power capacity addition in India thereby enhancing energy security of the country,” India's government said in statement issued in September.
The Delhi car show was a clear indicator of how seriously Tata Motors, with annual revenues of $42 billion, has started focusing on greener vehicles, as the government trumpeted its ambitious plans for the country to sell only electric cars by 2030.
But now New Delhi seems to have take a U-turn, with India's minister for road transport Nitin Gadkari at a press conference on Thursday saying that “there is no need for any policy now” regarding electric vehicles, the business newspaper Mint reported.
Industry experts say that such a target in just over a decade was always unrealistic, with India facing a number of challenges when it comes to transitioning to electric vehicles – although they remain confident that the country will continue to move towards greener transportation.
“It always good to come up with something that is achievable,” says Rohit Kumar, the head of REC in India, a Norwegian solar energy firm. “There can't be a sudden shift to electric vehicles – it has to be very gradual. I think the government realised that it's a bit too early to go that aggressive, so they've taken a couple of steps back.”
Given the high levels of pollution in India's cities, with fumes from traffic being a major factor, moving towards green transportation could play a significant role in the Indian government's pledge to reduce carbon emissions. Under the 2016 Paris Agreement, a global climate pact, India has committed to generate at least 40 per cent of the country’s electricity from non-fossil sources in an effort to tackle climate change.
In addition, green transport could help cut India's costly dependence on fuel imports.
The government's September statement highlights that going electric could help the country reduce its energy demand by 64 per cent and carbon emissions by 37 per cent in 2030, as well as leading to savings of close to 4 trillion rupees (Dh228.58bn) on petrol and diesel costs.
But the major roadblock when it comes to the adoption of electric cars in India is the lack of necessary infrastructure. Few charging points in the country mean that potential buyers are put off by the uncertainty about whether they will be able to recharge their car on a long journey - often referred to as “range anxiety”.
“The major challenge we are facing is this range anxiety and the infrastructure,” says Ayush Lohia, the director of Lohia Auto Industries, which manufactures two and three-wheel electric vehicles in India. He add that the latest news “doesn't mean that the government won't promote electric vehicles” and he explains that consumers in India are becoming more aware of and interested in electric vehicles.
The number of electric vehicles being sold in India are still very small. There were 22,000 sold in 2016, up from 16,000 in the previous year, according to the Society of Manufacturers of Electric Vehicles. Only 2,000 of these were actually cars, with most of these vehicles being autorickshaws.
Mr Kumar points out that for electric vehicles to be truly green, they should run on electricity produced from renewable energy, so India needs to continue to develop this area.
“You need to incorporate renewable or it defeats the whole purpose of having electric vehicles,” he says.
Global car manufacturers, including Toyota and Mercedes-Benz, have openly expressed concerns about India's target of electric-only vehicles being available by 2030, and questioned the notion of electric in the first place.
“By 2040, the whole world will be driving home hydrogen cars,” Roland Folger, the managing director of Mercedes-Benz India told the Press Trust of India news agency. “To me the whole plan to go electric nationwide looks like a rushed with idea.”
There were also concerns for Indian firms.
“I think that the Indian automobile manufacturers were getting nervous because of their huge investments in diesel and petrol vehicles, so it should soothe their nerves that the government has changed its stance [regarding any policy],” says Mr Kumar.
But because the government last year was so vocal about a push towards greener transportation, it means that some manufacturers have become more active in the space.
Tata Motors, which owns Jaguar Land Rover and has 9 million cars on India's roads, in September won an order from the Indian government to supply it with 10,000 electric cars, fending off competition from Mahindra Group and Nissan. This was described by the government as the world’s largest single electric vehicle procurement.
Mahindra, a Indian conglomerate, was the first Indian company to manufacture and sell electric vehicles in the country , with its products including the e2oPlus, a hatchback aimed at urban commuters, which is priced at around 800,000 rupees.
But the prices of electric cars are relatively steep for the market, with petrol and diesel hatchbacks readily available for under 500,000 rupees, and this is another factor that is hampering demand in a very price sensitive market, industry insiders say.
The main expense incurred in producing electric cars in India are the batteries. These are largely being imported from countries such as China at the moment because there is not a critical mass of electric vehicle production in India.
US electric car maker Tesla opted for China for its first overseas car assembly plant, but the Indian government has said it would be keen for the company to set up operations in India, although there are no such current plans.
Sohinder Gill, the director of corporate affairs at the Society of Manufacturers of Electric Vehicles, says that incentive schemes should be put in place in India for the industry to put millions of electric vehicles on the road. China, for example, in November announced a policy to allow car buyers to be able to take larger loans for purchasing a electric vehicle compared to a car using traditional fuel. China has set a target that car makers will need to generate credits for green energy vehicles equivalent to 10 per cent of yearly sales by 2019. The US, meanwhile, offers tax incentives on purchases of electric cars.
“If we bring a higher volume of electric vehicles, everything will start rolling, the component industry will pick up, the awareness will increase and the customers who are buying petrol vehicles will have an alternate which is viable and also has a value for money proposition,” says Mr Gill.
Mr Lohia, meanwhile, is confident that the outlook is bright for the industry in India.
“The future is definitely electrifying for us,” he says.