Government will need to incentivise shift to electric vehicles. Widespread adoption will require supporting infrastructure
The electric vehicles market in India appears to be gaining traction. Companies have not only started to manufacture electric scooters and bikes in states like Uttar Pradesh, but have also begun to research for alternatives to lithium-ion batteries, which are mostly imported from China. EV major Tesla is expected to launch its India operations early next year, signalling the market’s attractiveness. In due course of time, with more money flowing into research, India could emerge as the number one manufacturer of electric vehicles like cars, bikes, and tractors, said Nitin Gadkari, Minister of Road Transport and Highways, at the Indian Express Idea Exchange programme. These are welcome developments, and signal the long-term attractiveness of the EV market segment in India.
The arguments in favour of a shift towards electric vehicles are straightforward, arising largely as a response to the challenges of pollution and energy security. India has 21 of the world’s 30 cities with the worst air pollution as per data from IQAir AirVisual’s 2019 World Air Quality Report. And much of the pollution load can be traced to vehicular emissions. As such, the adoption of electric vehicles will reduce overall emissions and also help meet the targets under the Paris agreement. Such a shift would also help lower the country’s dependence on oil imports. A NITI Aayog report had earlier pegged the savings in the oil import bill at Rs 1.2 lakh crore (assuming crude at $70 per litre). Considering such a shift will lead to enormous socio-economic and environmental benefits, a prudent approach would be to channel investment towards facilitating the shift of various modes of public transport, two-wheelers and taxis to electric vehicles. Covering these modes of transport itself would include nearly 80 per cent of vehicles on Indian roads as per the NITI Aayog study. This approach, as an analysis by TERI suggests, would help reduce pollution, lower oil imports, and cut carbon emissions and road congestion. Arguments in favour of subsidising the shift for premium four-wheeler cars ignore that they account for only 2 per cent of total vehicle sales in India.
However, there is the issue of creating the charging infrastructure at the scale required to facilitate its large-scale adoption. Affordable and convenient charging will, after all, increase the segment’s attractiveness for consumers. In the US, for instance, President-elect Joe Biden has pledged to build 5,00,000 new EV charging stations. However, while public funding may well be required to incentivise both manufacturers and consumers to shift, governments should be agnostic between various EV technologies.