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India: At Least 7 Million EVs on Roads by 2020

According to a study commissioned by the Society of Indian Automobile Manufacturers and the Ministry of Heavy Industry, India has the potential to reach sales of over 7 million electric vehicles (EVs) by 2020. The government’s incentives for EV manufacturers and consumers have sparked interest, however, challenges remain.

The potential for electric vehicles in India is enormous particularly owing to high urban congestion, low manufacturing and research and development costs as well as the presence of a large share of population in cities that will reach 200 million by 2020. A December 2011 report by the Society of Indian Automobile Manufacturers and the Ministry of Heavy Industry indicates that India’s plan to put 7 million EVs on roads by 2020 might require investments of Rs 22,500 crore (about € 4.5 billion).

In November 2010, the Ministry for New and Renewable Energy unveiled its plans for electric vehicles within the Alternative Fuels for Surface Transportation programme. A specialised government body, the National Council for Electric Mobility (NCEM) has also been formed to work on a policy for the promotion of electric vehicles in the country.

Government incentives for EV manufacturers and buyers

In the 2012-2013 budget, the Ministry of Heavy Industry has proposed an incentive package of Rs 6,000 crore (about € 1.2 billion) to boost the manufacturing of electric and hybrid cars in the country. The fund will be used for providing infrastructure support and also setting up research and development centres for electric and hybrid vehicles. The ministry has also proposed a further customs duty reduction on lithium ion batteries and other imported parts, which are used to produce these cars. The current level of 5% duty adds to the cost of manufacturing electric vehicles.

Already since November 2010, EV manufacturers are able to benefit from a 20% financial incentive by the government on the ex-factory price of each EV sold in India. This scheme, which enables manufacturers to lower the prices of their vehicles and thereby boost their sales, will expire in March 2012.

It is expected that the NCEM will formulate policies and regulations that would provide not only financial incentives, but also non-financial incentives to customers, such as parking and toll benefits. All these recent developments signal the growing emphasis that the Indian government puts on encouraging the growth of electric vehicles.

Underdeveloped EV market and infrastructure

Despite growing interest, currently there is only a limited number of market players that are established in the area of EV production. Mahidra Reva is the key company, covering 50% of domestic sales of electrified cars. Several car manufacturers have introduced hybrid technologies, while others have been waiting for a clear policy and concrete initiatives before they expand to India.

Charging infrastructure in India is also not developed yet. Although there have been projects in Delhi and Bangalore that established a number of public charging stations, these are not sufficient to cover the needs of EV buyers. Another notable challenge is the overall electricity infrastructure shortage, which might be a serious hurdle in building an EV infrastructure.

Article from: cars21.com

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