This week in Auto: Arm-twisting by govt over electric vehicles; Jaguar chief’s salary slashed

Here’s a look at all the major developments of the week in the automotive sector

Over the last three-four months, everybody has started to talk about electric vehicles (EV). Some parties such as the government and policy makers are in favour of it while other like automotive companies are busy searching for faults in the government’s diktat to 100 percent EV transition. This is the topic of discussion in today’s wrap, too, but here’s a look at all the major developments of the week in the automotive sector.

Income tax deduction on electric vehicle buys

The Centre has gone all out in pushing electric vehicles as the best choice for future mobility. In an effort to make electric vehicles more affordable, Finance Minister Nirmala Sitharaman has proposed to provide an income tax deduction of Rs 1.5 lakh on the interest paid on loan taken to buy EVs.

This is the first time that electric vehicles have been proposed to become a direct tax beneficiary. The buyer of an EV can enjoy a total benefit of Rs 2.5 lakh over the purchase period, Sitharaman added.

Jaguar CEO salary slashed

The compensation of Jaguar Land Rover CEO Ralf Speth contracted by 21 percent during FY19 after the Tata Motors-owned British carmaker posted a loss of 3.3 billion pounds (approx Rs 29,000 crore).

Speth took home Rs 31.82 crore in FY19, down from Rs 40.08 crore for FY18. The pay-out does not include encashable leave and gratuity, according to details given in the 74th annual report of Tata Motors.

India will have 21mn vehicles scrapped

India is the fourth-largest producer of automobiles in the world but does not have a vehicle scrapping policy in place. But, in the Economic Survey 2019, the government of India has put vehicle scrapping in the priority sector for enhancing the resource efficiency.

As many as 21.8 million vehicles are expected to reach the end of life in six years, given the reducing average life of vehicle ownership.

Not incentives but infra needed to push EV growth

The Economic Survey has quoted studies showing that more than incentives offered to manufacturers and users, good charging infrastructure is key to mass adoption of electric vehicles (EVs). That is because the driving range of batteries in an electric vehicle is lower, compared to those which run on fossil fuel.

“We find that the market share of EVs is positively related to the availability of chargers and larger availability of chargers corresponds to greater adoption of EVs. The market share of EVs increases with the increasing availability of charging infrastructure,” the survey said.

MG Motor ties up with Fortum

MG Motor India on July 2 said it had tied up with Fortum Charge & Drive India to set up charging stations for electric vehicles at its showrooms in five cities, including Delhi-NCR, ahead of the launch of its electric SUV, EZS, later in 2019.

Under the partnership, Finland-based clean energy major Fortum will install 50 kW DC fast-charging EV stations at MG Motor India’s showrooms in Delhi-NCR, Hyderabad, Mumbai, Bengaluru and Ahmedabad by September to begin with, the company said in a statement.

Domestic car sales disappoint yet again

The domestic car market yet again posted a disappointing set of numbers as poor buyer sentiments continued to affect retail car demand. Almost every carmaker reported a drop in wholesale volumes in June.

Domestic sales of Maruti Suzuki slipped into the negative for the fourth consecutive month in June, recording a drop of 15 percent to 114,861 units as against the same month in 2018.

The EV revolution that Niti Aayog needs so desperately

Niti Aayog Head Amitabh Kant has raised the tempo several times over for making electric vehicles the mode of transport in the mid to long term future.

The deadline for 100 percent conversion to electric for two-wheelers having engines below 150cc is 2025 and 2023 for three-wheelers. Now, Kant has ruffled quite a few features over the last few weeks.

Kant is known to be close to Bajaj Auto MD Rajiv Bajaj who, at a press event held in New Delhi in January, praised Kant’s contribution in making the Qute quadricycle a reality.

But, within six months, the situation changed. Bajaj, along with other well-known names from the auto industry such as TVS Motor Company Chairman and MD Venu Srinivasan, were forced to criticize Niti Aayog diktat over switch to 100 percent electric in 4-6 years.

The two were later joined by Honda Motorcycle and Scooter India, the country’s second largest two-wheeler maker. They are asking for more lead time in venturing to electric vehicles as the industry gets ready to enter Bharat Stage VI (BS-VI) in a few months.

The government of India believes that the thrust laid down by Niti Aayog over electric vehicles is not unfounded. To reduce dependence on imported oil and to arrest the erosion of foreign exchange reserves the automotive industry needs to move to electric mobility at the earliest period possible.

This is why, for the first time ever, the government announced income tax deduction for those buying electric cars on loan. Buyers will benefit from Rs 1.5 lakh deduction on interest paid on loan of such cars.

Industry players such as Mahindra & Mahindra MD Pawan Goenka, agreed that incentives such as income tax deduction would surely help in the faster adoption of electric vehicles. There is also an urgent need to have the manufacturing ecosystem for EVs in India.

“A lithium-ion cells manufacturing plant will take a minimum of 2-3 years to commence operation. This is a highly specialized subject and it is not for everyone to enter the space. But to make India the hub of EV manufacturing it is absolutely essential to make the cells in India. Today only 60 percent of a Mahindra electric car is made in India and the rest is imported”, Goenka told Moneycontrol on July 5.

The other favourite subject of automotive companies for starting a debate against electrification is the near-absence of charging stations. Most foreign brands such as Honda, Fiat, Ford, Toyota, Volkswagen and even Suzuki have the raised the issue of lack of charging infrastructure.

But, Goenka says, “This is the classic ‘chicken-n-egg’ situation. We don’t have the cars to set up the charging stations and neither can we have the charging stations because there ar no cars. But at Mahindra we have not waited for the charging stations to come up because that way the EV transition will never happen.”

Source: moneycontrol