What will it take to make price-conscious Indians switch to electric vehicles? – EQ Mag Pro
The Indian government has already laid out its vision with a target of 30% electric vehicles on the road by 2025. It is already working to provide the required amount of charging infrastructure and has approved setting up 2,636 electric vehicle charging stations across 62 cities in 24 states and union territories of India under the second phase of FAME India scheme.
India’s long-awaited transition to electric vehicles is finally gaining traction. The increased attention on electric vehicles is largely because of two factors: to combat the rising menace of air pollution, and reduce India’s over dependence on crude oil imports. Moreover, support to domestic R&D, tax cuts, subsidies on import of raw materials and other incentives are also acting as catalysts in this transformation.
As the market is becoming more competitive, it is imperative to think what it will take to make the price-conscious Indian buyer switch to an electric vehicle. The three major questions that remain in most buyers’ minds are purchase price parity with fossil-fuel vehicles; benefits in operational and maintenance cost; and finally, range or the availability of adequate charging infrastructure.
The average cost of an electric vehicle has remained higher than conventional ICE options but recent incentives towards manufacturing and increased availability of essential component through suppliers, are helping EV manufacturers to produce affordable electric solutions. India has efficiently scaled up battery manufacturing under the ‘Make in India’ initiative and will soon become the hub of battery manufacturing. The increasing interest from foreign investors will pave the way for all-round growth.
The Indian government is trying to push domestic manufacturing by incentivising local production, and disincentivising the import of EVs. Additionally, the Ministry of Heavy Industries and Public Enterprises has announced a 50% increase in incentives for electric two-wheelers to Rs 15,000 per kilowatt-hour from Rs 10,000 per kWh. As per the new rules, the cap on incentives will be limited to 40% of the total price compared to the earlier cap of 20%.
It has also mandated Energy Efficiency Services Ltd (EESL) to procure 3 lakh electric three-wheelers for different uses. These decisions will drastically help the manufacturers to cut the cost of electric models and will make them more achieve parity with petrol / diesel vehicles, and in some cases, even cheaper than them!
The FAME II stimulus has been helpful in the growth of organised 3-wheeler EVs as it reduces the high sticker-price of 3-wheelers that run on Li-ion batteries. The cost difference between the commonly-in-use lead-acid battery and the more advanced Lithium-ion is usually between Rs 100,000 to Rs 200,000 for a 6kWh – 12kWh battery. But the incentives under FAME II on Lithium-ion battery EVs reduce this price difference quite effectively.
So far, the advantages of owning electric vehicles have remained hidden. The reality is these electric solutions are far more cost efficient and sustainable in the long-run for an average Indian buyer who wishes to go for pocket-friendly variants.
For example, if 10 units of electricity are required to fully charge a cargo electric 3-wheeler sufficient to deliver a range of 100 kms, then at an average cost of Rs 6 a unit, a day’s work can be completed for Rs 60. As compared to this, the diesel version with a mileage of 20 km per ltr at an average price of Rs 90 per ltr would take around Rs 450 to cover the same distance, thus making EVs over 80% cheaper to operate.
Also, the maintenance cost of an EV is lower than an ICE vehicle as it doesn’t run on complex combustion engines or moving parts. Road-ready EVs only require infrequent checkups of electrical systems, including the battery, motor and electronic components, which helps reduce the maintenance cost by approximately 40% as compared to ICE vehicles.
The Indian government has already laid out its vision with a target of 30% electric vehicles on the road by 2025. It is already working to provide the required amount of charging infrastructure and has approved setting up 2,636 electric vehicle charging stations across 62 cities in 24 states and union territories of India under the second phase of FAME India scheme. It has also directed developers to set aside 20 percent of parking space for EVs in all residential and office projects that will greatly solve the challenge of charging infrastructure for EV owners.
Purchasing price parity with ICE vehicles, coupled with the benefits of long-term operational costs advantages of EVs, are being promoted among potential buyers to boost the latter’s adoption rate. In addition to financial reasons, the rise of conscious Indian buyers who are aware of their environmental responsibilities is also driving the growth of EVs in India.
Source: PTI
