Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Electric Vehicle

Pursuant to its commitment to the Paris Agreement, under the United Nations Framework Convention on Climate Change (UNFCCC), India has set a target of 33-35% reduction in the emissions intensity of its Gross Domestic Product (GDP) by 2030 and an increase in the share of non-fossil fuels in its power generation capacity[1]. There have been improvements in the reduction of emissions intensity, however, India remains heavily reliant on the fossil fuel sources, with about 80.14% of the total energy consumption being driven by coal, lignite, and crude oil, as of 2017-18.[2]

Venkatesh Raman PrasadThough the percentage of renewable energy to total generation has been rising over the years in India, renewable energy in 2018-19 still constituted only about 9.21% of the total energy generated in the country.[3] Going forward, India not only needs its production patterns to focus on renewable energy but also to transform its consumption patterns to provide clean mobility solutions. Recent policy initiatives by the Government of India (GoI) and active engagement with other countries to achieve sustainable energy by adopting cleaner fuels could pave the way for green mobility.

India intends to undertake a host of measures to reduce carbon emissions in the transportation sector, which is one of the main consumers of diesel and petrol. Green mobility fuelled by electric and hybrid vehicles and hydrogen cell vehicles present an environmentally-friendly alternative to internal combustion engines powered vehicles. E-vehicles present an ideal opportunity to reiterate India’s environmental commitments to the Paris Agreement, reduce dependence on fossil fuels, and promote the demand for renewable energy.

Government Initiatives

Recent years have witnessed a turning point for the Indian e-vehicle market, with the GoI and various State Governments announcing a slew of incentives for the production and use of e-vehicles.  These include:

  • National Electric Mobility Mission Plan 2020;
  • Scheme for Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (Phase I);
  • Scheme for Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles, (Phase II)
  • revised guidelines and standards for charging infrastructure for e-vehicles issued by the Ministry of Power (as revised on October 01, 2019)[4], and fresh technical standards for charging infrastructure issued by Central Electricity Authority[5]; and
  • reduction in GST rates on e-vehicles, charging infrastructure, and exemptions.

Challenges and Concerns

Despite the promising climate fostered by positive measures, a number of challenges have yet to be overcome to spur green mobility and the successful, wide-scale rollout of e-vehicles. Some of these include:

  • Source of energy for charging infrastructure: While considerable debate in India has centred around incentivizing manufacturers and purchasers of e-vehicles as well as ensuring an adequate charging infrastructure, the source of electricity for these charging stations has yet to be determined, as the country’s renewable energy contribution in the total electricity generation is still inadequate[6]. Therefore, sourcing of electricity for these charging stations from renewable energy sources has to be ensured for promoting green mobility. 
  • Battery Waste Management: Adequate infrastructure for recycling of Battery waste has to be created to ensure that the battery waste disposal is done in an environmentally sound manner and further to ensure that the use of e-vehicles does not harm the environment. 
  • Range anxiety: A dearth of charging points creates uncertainty in buyers’ minds with regard to facilities for power recharge (including fast e-chargers) for their e-cars on long journeys[7]. The low penetration of the charging infrastructure poses a serious challenge to the e-vehicle market. Battery swapping infrastructure has to come up in a big way to supplement the e-charging infrastructure in order to address the range of anxiety and easing the e-vehicle adoption.
  • High Prices: The cost of e-vehicles is still prohibitive for the average Indian consumer[8]. It will be some time before the cost of e-vehicles is comparable with that of vehicles powered by fossil fuel. Similarly, the high front-loading cost of mass mobility e-vehicles is an obstacle to opting for an electric fleet. As a measure to spur demand, GoI and the State Governments should consider providing further incentives to reduce the upfront cost of purchasing such vehicles.
  • Surety of supply: Ensuring an uninterrupted supply of power at charging stations is also a major concern. Power cuts continue to remain a challenge in India despite the surge in the generation output.

Revitalizing Momentum

A concerted effort that combines fiscal, monetary, and other incentives, backed by a robust regulatory and legal dispensation, is vital for the success of India’s climate-friendly initiatives towards green mobility. To meet the challenges, GoI has already initiated various incentives. These focus on (a) increasing the share of renewable energy in the total energy generation; (b) addressing the concerns relating to the management of battery waste by regulating its treatment and disposal; (c) developing a framework for proliferation of electric charging stations; and (d) facilitating the establishment of large manufacturing plants for lithium-ion batteries in order to reduce the cost of e-vehicles.

The Way Ahead

While several measures have been taken, however in the Union Budget 2020-2021 no fresh announcements or incentives were given for the EV sector.. The Budget did give a push for the ‘Make in India’ initiative, however, the higher customs duty on imported EVs will adversely impact Original Equipment Manufacturers (OEMs) and battery manufacturers. With energy consumption set to escalate through the years ahead, the mix of renewable energy in the power generation should increase substantially given the 450GW target for 2030 set for the renewable energy sector. E-vehicles have the potential to play a key role in such a transformation of increasing reliance on clean energy sources to power our needs. For a successful and a meaningful impact on reduction of carbon footprints, electric vehicles should power the fleet of buses used in public transportation as also for the two-wheeler and four-wheeler market. Further, sourcing of electricity from clean energy for electric vehicle charging infrastructure as well as the environmental impact of battery waste management will have to be addressed to ensure ‘real’ green mobility through e-vehicles, the ultimate aim being the achievement of global committed targets in respect of energy efficiency and emission reduction as also effective environmental commitment to society.

[1] India to reduce the Emissions Intensity of its GDP by 33 to 35 Percent by 2030 from 2005 Level <https://pib.gov.in/newsite/PrintRelease.aspx?relid=128403>

[2]Energy Statistics 2019, Government of India, Ministry of Statistics & Program Implementation <http://www.mospi.gov.in/sites/default/files/publication_reports/Energy%20Statistics%202019-finall.pdf

[3] CEA Annual Report 2018-19 <http://cea.nic.in/reports/annual/annualreports/annual_report-2019.pdf>

[4]Charging Infrastructure for Electric Vehicles (EV)-Revised Guidelines and Standards <https://powermin.nic.in/sites/default/files/webform/notices/Charging_Infrastructure_for_Electric_Vehicles%20_Revised_Guidelines_Standards.pdf>

[5]Central Electricity Authority (Measures relating to Safety and Electric Supply) (Amendment) Regulations, 2019 <http://www.cea.nic.in/reports/regulation/measures_safety_2019.pdf

[6] CEA Annual Report 2018-19 <http://cea.nic.in/reports/annual/annualreports/annual_report-2019.pdf>

[7] Ground Reality: The Math Behind India’s Electric Vehicle Charging Infrastructure <https://inc42.com/features/the-math-behind-indias-electric-vehicle-charging-infrastructure/>

[8]India’s electric vehicle sales face challenges of affordability, charging <https://www.thehindubusinessline.com/economy/indias-electric-vehicle-sales-face-challenges-of-affordability-charging/article29614676.ece>

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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