Government has thrown down the gauntlet by pushing EVs

Government has thrown down the gauntlet by pushing EVs

India which aims to go 100% electric vehicles by 2030, has its tasks cut out as this target is an ambitious one. However, with the cost of batteries plunging by 60% by 2020, right policy framework could help meeting this target. Article, therefore spells out India’s current policy push towards electric vehicles, while attempting to address challenges it would face in reaching its target.

Many cities in India are struggling with severe air-quality problem, primarily from vehicular pollution prompting governments and courts to intervene. However, the recent policy announcement by the Centre on replacing all the conventional vehicles with the electric one by 2030 has stunned the world. The government has thus thrown down the gauntlet to itself amidst already rising oil imports, largely to feed its transport sector, which is contributing towards unbated vehicular emissions. India’s relentless crude oil dependency increased from 77.6% in 2013-14 to 83.4% in April 2017, continues to be a thorn in flesh for policy makers.

Worsening air quality, primarily from vehicular emissions has put Delhi at the core of recent air quality debates. In November 2016, Delhi has already witnessed the worst smog in last 17 years. According to the World Air Quality Index, Delhi’s Air Quality Index on November 7, 2017 was recorded at 999, which was quite high even from the “hazardous” level of 500. These developments forced Delhi Government, the National Green Tribunal (NGT), Delhi High Court and the Supreme Court of India to intervene repeatedly.

For instance, in January 2016, the Delhi government come up with several measures, like introduction of odd/even vehicles on alternate days, extending operational timings of metro or introduction of new fleet of Delhi Transport Corporation busses. In November 2016, when Delhi’s smog broke 17 years record, Delhi High Court dubbed smog akin to “living in a gas chamber”.

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Earlier, in its order dated November 26, 2014, NGT has banned all vehicles which are more than 15 years old, citing diesel as a prime source of air pollution, a decision also upheld by the Supreme Court. Further, on December 16, 2015, the Apex court banned the registration of luxury automobiles and sport utility vehicles with an engine capacity more than 2000cc in NCR. Though the ban was lifted within six months in August 2016 due to its negative impact on the auto industry and jobs, the Supreme Court imposed a cess of 1%.

However, the reversal of ban with a meagre quantum of tax imposition on an issue which is severe in nature is not seen by many as an effective one. Anumita Roychowdhury, executive director at the Centre for Science and Environment (CSE) for instance, observed this decision as cosmetic rather than a deterrent, which can bring any positive outcomes.

The seriousness of the issue was noted well in a recent report titled, “Airpocalypse – Assessment of Air Pollution in Indian Cities” of the Greenpeace, wherein it is observed that 3% of India’s GDP was lost due to the levels of toxic smog, which was killing 1.2 million Indians every year.

Intensifying the measures for cleaning up the air beyond Delhi, the Supreme Court banned the sale and registration of Bharat Stage (BS-III) emission norm. Government has now set a deadline of 2020 to switch to BS-VI norms from BS-IV, which include technology upgradation, which made petrol and diesel vehicles costlier by ₹20,000-₹25000 and ₹1 lakh respectively.

Taking stock of the deteriorating air quality, a joint study by the Niti Aayog and Rocky Mountain Institute, titled, ‘Transformative Mobility Solutions for India’ was conducted which recommended policy makers to replace the existing conventional mobility with electric vehicles by 2030.

The Study advocates for considering the challenges of deteriorating air quality as an opportunity for India by recommending it to invest in world-class transportation system to improve life of its citizens to meet its economic goals in a more sustained manner. The report also recommends India to take lessons from the U.S.’s unsustainable mobility infrastructure which is underutilized, expensive, dirty and inefficient while aligning its electric mobility plans with existing initiatives such as Make in India, Digital India, the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) and Smart Cities.

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There are several enabling factors such as social, economic, and environmental instrumental for a growth of electric vehicles in India. For instance, India’s shift towards BS-VI, a stricter fuel economy standard, which pushes the price of conventional cars on higher side could prompt people to shift towards more cleaner and cheaper option of electric cars. In a similar vein, government has kept rates of Goods and Services Taxes (GST) of hybrid cars at par with the luxury cars at 28%, while assigning low rate of GST on EVs at 12% to push for EVs. Though GST on EVs at 5% could have been instrumental to spurring the growth in EV markets.

Further, India’s strong support to Paris climate deal and building a consensus within its framework has strengthened its effort towards formulating green growth strategy, wherein promotion of electric transportation has a major role to play.

In addition, sharp fall in solar power tariffs and fixing a lowest rate of GST at 5% will go a long way in moving towards grid parity, a pre-cursor for successful integration of solar and e-mobility at home and office.

However, the biggest enabler to boost EV markets, particularly in India, are advances made in battery efficiency which has translated into lower costs and high range. Consequently, the battery pack prices have fallen around 80% from 2010 to 2016 ~$1,000/kWh to ~$227/kWh and Tesla is now aiming for price of $100 per kWh before 2020. This could be a tipping point to make electric cars more competitive with gasoline vehicles and a game changer for EVs growth in India. With respect to the vehicle range too Tesla Model S has improved from 208 miles per charge in 2013 to 249 miles per charge in 2017 showing positive signals towards its growth.

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Thus, it is the restructuring of the whole ecosystem by the government in the light of above developments and deployment of the new business models by EV companies like Tesla to such eco-system which are profitable and not just meant for compliance purpose can steadfast the EV growth in India.

Modi government has contemplated a policy push for the sale of EVs without batteries, supplemented with battery leasing operations and batter swap stations, primarily to address the issues in hand with respect to scattered charging stations and expensive batteries under the broader framework of FAME scheme launched in 2015.

However, with the ambitious target of 100% replacement of traditional vehicles with EVs, which needs 10 million EVs sold annually in India by the end of next decade, as projected by International Energy Agency, government has thrown down the gauntlet.

 

Disclaimer: Views expressed in this article are those of the author.

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