If all goes well, the Government will announce a whopping Rs. 14,000 crore for all its citizens who buy hybrid/electric cars. The heavy industry ministry moved a proposal for clearance by the finance ministry which suggests that the maximum subsidy of 35% should be given to pure electric vehicles, while a 25% benefit should be provided for plug-in vehicles that can drive for at least 15km in one charge.
This long awaited subsidy that has been in the planning stages since 2011, comes as a much needed boost to the electric car sales in India which has not picked up because of high prices and slower economic growth, amongst other factors. Earlier this year, Mahindra Reva introduced a smaller and cheaper version of its car, e20, at Rs. 5,00,000, a year. This came a year after the introduction of the original e20 at Rs. 7,50,000, a car that had sold only 500 units one year after its launch.
“The auto industry was down the entire time last year and that didn’t help us and the policy (on the government subsidizing purchases of electric cars) that was supposed to come out at the time, didn’t. So, I think these two issues have been challenges for our side in this area,” Mahindra Reva Chief Executive Chetan Maini said in an interview to Livemint, during the launch of e20 in Feb 2014.
How the subsidy saves fuel and cuts pollution
The Government plans to give this subsidy based on savings that we will incur as fuel consumption reduces. While the Government’s expenditure on this scheme will be an estimated Rs. 14,000 crores till 2020, savings in fossil fuel usage has been estimated at Rs. 60,000 crore over a six year period, said an official to The Times of India.
This is one of many measures that the Government is taking, along with manufacturers, to make electric cars more affordable. The National Electric Mobility Mission Plan 2020 was launched by the govt last year. Automobile industry forecasts say that there should be about 6-7 million sales of new vehicle units by 2020, which should result in liquid fuel savings of 2.2 – 2.5 million tonnes. This will also result in substantial lowering of vehicular emissions and decrease in carbon dioxide emissions by 1.3% to 1.5% in 2020 as compared to a status quo scenario.(Source: NEMMP).
According to researchers at the US Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab), hybrids are ideal for Asian cities. “What makes cities in India and China so frustrating to drive in – heavy traffic, aggressive driving style, few freeways – makes them ideal for saving fuel with hybrid vehicles.”
Slow pick up: Electric Cars in India
Plagued by high costs and a poor battery charging infrastructure, EVs are highly nascent in India – a report states that only 130,000 EVs were sold in India in 2012, with 97-98% of them being 2-wheelers. Since the country’s electricity is predominantly powered by coal (57% with severe distribution losses), unless the charging stations are run by renewable energy, the net savings on emission does not hold good, it merely shifts from gasoline to coal, says a report by Sustainability Outlook India.
Recharge stations are a huge part of the problem and that is what Japanese car maker Nissan is trying to solve through a franchise model, ahead of the potential release of its vehicle ‘Leaf’ in India.
“We are actively looking at the Leaf for India… I think there is a lot of potential for that car here,” says Andy Palmer, Chief Planning Officer, Nissan Motor Corp, in an interview with Hindustan Times. “There is no doubt that electric cars are the future. The product is there, what we need is the infrastructure. Charging is a big challenge. We are open to collaboration with local manufacturers on that.”
In congested cities (and which city isn’t, in India?), gearless EVs ease commute while polluting less. The Rs 14,000 crore subsidy scheme may be just the electric shot in the arm for car makers that have long been waiting for the price reduction as well as city folk who have recently only seen the fuel prices go higher, and higher, and higher.
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