EV push: Auto industry calls for middle path

People planning to buy a car next year do not have much to cheer. Major carmakers such as Hyundai, Honda, Tata Motors, Maruti Suzuki, and Nissan have raised prices effective from January 1, 2019. Now, the industry, too, is in a funk over the government’s plan to impose a fee of Rs 12,000 on the purchase of any new petrol or diesel cars in order to incentivise electric vehicles (EVs) and battery manufacturing in the country.

According to a report by The Times of India, a note prepared by NITI Aayog proposed incentives of Rs 25,000-50,000 in the first year for those buying electric two-wheelers, three-wheelers, and cars. The revamped policy has been drafted after Prime Minister Narendra Modi rejected an earlier draft and asked bureaucrats to ensure that batteries were incentivised to lower costs, instead of offering sops to automakers, says the report.

The news was understandably not well received by the industry. R.C. Bhargava, chairman of the country’s largest carmaker, Maruti Suzuki India, said that imposing taxes on conventional vehicles to promote EVs will not serve “the purpose” as only the rich would end up receiving subsidies. In a media statement, he said that the biggest problem in India is the large number of small cars, 70% of which are not parked at homes, making charging difficult. “I don't think that small car electrification can happen on the basis of subsidies. We need technology for that."

Bhargava said that two-wheelers, too, should be made part of the EV push. “Two-thirds of the petrol in the country is consumed by two-wheelers, and electrification of two-wheelers becomes, so far, more practical in terms of infrastructure than electrification of cars. With 85-87% car parc [which refers to all registered vehicles within a defined georaphical region] in India between now and 2030 set to be non-electric cars, it is important to look at the problem in a holistic manner,” he said.

According to Bhargava, shifting to CNG, hybrid and biofuels is a better way to reduce dependence on crude oil imports. “By then (2030), if you like to reduce oil import and pollution, what are your options? Your options are CNG, hybrid and biofuels. All these three technologies are required.”

In September 2017, there had been much furore over road transport and highways minister Nitin Gadkari’s statement that auto companies would be bulldozed if they failed to manufacture cars that run on alternative fuels by 2030.

Many auto experts agree with Bhargava. “The government should work on how they can make EVs more accessible for the right consumer. For that, they need to understand that EV jump is not an easy task for an Indian consumer. So, they have to take the middle path through hybrid," said Gaurav Vangaal, senior auto analyst at IHS Markit. Vangaal said taxing cars that run on conventional fuels would discourage the entire industry.

“They should not levy taxes like this. It’s a good sign that the government is looking at the future. But by doing this you are discouraging both car manufacturers and consumers.”