The lights may be dimming for India's electric car momentum, but if you ask auto industry mandarins, it is very much the right way forward.
Sales of electric cars specifically have tanked in recent months, after the expiry of the previous subsidy scheme FAME 2 back in the summer. While a new one, the PM E-Drive scheme has just been launched, it leaves out any subsidy for electric four-wheelers, in a move that has surprised many.
However, Society of Indian Automobile Manufacturers (SIAM) president Sailesh Chandra downplayed this, arguing, “The PM E-Drive is comprehensive, with an outplay of Rs 10,000 crore…and has a very specific target.”
He also pointed out that during the previous FAME incentives, the four-wheeler rebates were only for fleet sales, ie, sale of electric cars to taxi service operators, and not for individual buyers.
“The bigger problem for personal EV car customers is the charging infra barrier,” Chandra added, “It’s a chicken-and-egg situation.”
There is a 2,000 crore government outlay for setting up around 22,000 EV charging ports across the country. SIAM officials expressed the hope that this could go a long way in assuaging the fears of ‘range anxiety’ amidst prospective electric car customers when it came to opting for the new energy mode instead of the internal combustion engine (ICE).
Chandra also pointed out that the rationale behind any subsidy is to let “customers experience a new mode until a critical mass is reached.”
“It is anticipated that by then the cost will come down so much that the subsidy can be removed,” he added, pointing out to the three progressions that have been happening in the industry over time — reduction in the price of cells, which is the single biggest cost of an electric vehicle (EV), the PLI-fired localisation moves for EV manufacturing which will help in further reducing the cost, as well as the growing scale.
“Once penetration hits 20 per cent, that is when the government should start lowering subsidies of EVs,” Chandra felt.
However electric car penetration, still at below 2 per cent in the country, is facing a bunch of push backs that have other reasons. For example, Japanese majors like Maruti Suzuki, Toyota and Honda have been either completely absent, or going slow, on bringing out EVs, instead pushing for hybrids as a ‘clean’ alternative. States like Uttar Pradesh also recently surprised many by announcing a set of RTO-level incentives for Hybrid vehicles. Rumours abound that Karnataka might follow next. Recently, at least two states took away the road tax rebate that EV four-wheelers used to enjoy earlier.