India’s most influential government think tank has unveiled a radical blueprint policy aimed at electrifying all of the country’s cars within the next 15 years.
What are electric cars and are they better for the environment?
Electric cars are cars that run at least partially on electricity powered by batteries or a fuel cell. Hybrid cars offer a petrol/diesel engine and a rechargeable battery. Other EVs rely on battery power only. A third, rarer class of EVs power the electric motor by converting hydrogen gas (hydrogen fuel cell vehicles).
Whilst certainly better than conventional cars in terms of air pollution and greenhouse gas emissions, just how much better EVs are tor the environment depends on the source of electricity. Battery engine EVs powered by the cleanest electricity sources produce net greenhouse gas emissions comparable to a car doing over 100 miles per gallon.
When charged by renewable sources, such as electricity produced by wind, solar or hydro energy, EVs can be nearly emission free.
Details of the Niti Aayog policy report
The report, issued on May 12th by Niti Aayog, the PM-led planning body, proposes lower taxes and loan interest rates on electric vehicles (EVs) whilst simultaneously putting a cap on the sale of traditional petrol and diesel models.
A new unified tax regime set to come into effect from July 1st also plans to impose a higher tax rate on hybrid vehicles in comparison to their electric counterparts in what is likely to be the third largest passenger car market in the next decade.
Although the plans are yet to be adopted, government sources have said the report would form the basis of a new green cars policy, echoing moves in China to push green vehicle technologies.
The previous policy plans, announced in 2015, addressed both, EVs and hybrid models (cars combining electric power and fossil fuels). By re-focusing on electric-only powered cars India is signifying a major shift in policy focus that will affect both, companies’ product offerings and consumer demands.
What is stopping EV progress?
The hindrances to the spreading electric vehicle use are likely to be same as elsewhere where EVs are looking to make an impact: prohibitively high battery costs, low electric battery mileage yield and poor infrastructure to make EV travel possible and painless.
India itself has only one electric car maker: the Mahindra Group. Sales have struggled due to low customer uptake and lack of infrastructure to make EV travel possible. According to journal OIPscience, the cost of setting up a charging station is anything from $500-25,000, depending on speed of charge.
The policy proposes funding the proposals through tax revenues from petrol and diesel vehicle sales but remains unclear about final figures or the amount of spend the government would have to contribute to cover any shortfall.
What happens next?
Currently, most automakers have focused on selling hybrid models as a stepping-stone to EVs, with Toyota recently launching its hybrid Prius in India and Hyundai looking for its Ioniq model to enter the market next year.
Now, however, car manufacturers are demanding more clarity before developing further release or manufacturing plans.
The world’s number two manufacturer by auto sales, Toyota, had planned a hybrid model for all its vehicles in India, but Indian subsidiary vice chairman has stated that the planned launches will now depend on the new policy. The sentiments have been echoed by Nissan, who have said they are looking to wait for further government steer before bringing electric cars to India.
So, how likely are these ambitious plans to pass? Much depends on the government being clear and transparent in its messaging to companies about what its 15 year vision looks like. It depends on how quickly India can improve infrastructure to make travel via EVs a real possibility rather than a cross between a motor show and The Amazing Race . And then there’s the money.