Electric Vehicles and Subsidies-The Way Ahead

Posted on: Dec 21, 2022 | | Written by:

Electric Vehicles and Subsidies-The Way Ahead

Published on December 21, 2022. EST READ TIME: 4 minutes

Transport is a fundamental requisite of modern life. However, the traditional combustion engine is quickly getting outdated. Petrol and diesel vehicles are highly polluting and are being swiftly replaced by fully electric vehicles. Bike insurance is a mandatory requirement in today’s scenario. Comprehensive bike insurance is advised for all two-wheeler owners. Further, a sustained and consistent push towards more sustainable and renewable sources of energy by the Government is encouraging a switch towards Electric Vehicles(EVs). Third-party bike insurance is compulsory for all vehicle owners according to the Motor Vehicles Act, 1988.

Government subsidy on electric vehicles

You might feel that purchasing an electric vehicle is more expensive than buying an internal combustion engine, but that is only the upfront cost. Also, the government offers different financial incentives to facilitate the purchase.

● National Incentives:

FAME, Or Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles, is India’s flagship scheme to promote electric mobility. Currently, in its 2nd stage of implementation, FAME-II is being implemented for 3 years from 1st April 2019 with a budget of Rs 10,000 crores.

The incentives offered in the scheme are

Total Approximate Incentive	Approximate Size of Battery
Two Wheelers: Rs 15,000/- per kWh up to 40% of the cost of Vehicles	Two Wheelers: 2kwh
Three Wheelers: 10000/- per kWh	Three Wheelers: 5kwh
Four Wheelers: 10000/- per kWh	Four Wheelers: 15kwh
E Buses: 20000/- per kWh	E Buses: 250 kWh

What happens when they go away?

1. EV Prices will increase

Manufacturers have already been planning for the day when there won’t be any subsidies to make their subsidies. Some measures include localizing battery cell production, reducing dependence on metals like cobalt, experimenting with alternate battery chemistries and lastly the economies of scale. So, in the future, even though electric 2-wheelers are estimated to be more expensive than they are now, prices could still be kept somewhat competitive with traditional 2-wheelers.

2. Reduction in features

All the top-tier EV-2 wheelers currently offer top-of-the-line features which include connectivity, navigation and fancy touchscreen displays. However, these features may be dropped for simpler, conventional displays, without compromising on the performance and range on offer.

3. Lower-spec, lower-cost alternatives

The right thing for manufacturers to do would be to incorporate all learnings from their flagship products to make more affordable products to complement them. These would involve skipping out the high-end features in these models with more standard and conventional features and also reduced performance and range. This would facilitate customers to select the specific EVs based on their specific needs and budget.

A few companies in the sector have already taken these steps with Ola launching the S1, reducing dependence on metals like cobalt, experimenting with alternate battery chemistries, and around Bajaj working on multiple electric 2- wheelers on the lines of the iconic Chetak, which is geared towards being more affordable.

Who benefits from EV subsidies?

The ultimate beneficiaries of the EV subsidies are the end consumers, however, the subsidies are majorly targeted towards the manufacturers of EVs to create a sustainable and viable economic environment to boost production and lead to large-scale adoption of EVs in a bid to counter the ill effects of vehicular emissions.

The major benefits of an Electric Vehicle include

1. Lower running costs

The running costs of an EV are significantly lower than a petrol or diesel vehicle, as these vehicles utilise electricity to charge their batteries which is cheaper in comparison to filling petrol or diesel for your requirements. Bike insurance is still required for two-wheeler owners. Using renewable energy sources also facilitates making vehicles more eco-friendly. Further, the cost of electricity can be reduced if such charging of vehicles is done using renewable sources of energy such as solar panels installed at homes.

2. Lower maintenance costs

Electric Vehicles also have significantly lower maintenance costs as they do not require moving parts as the conventional internal combustion engine. Comprehensive insurance and third-party insurance are additional costs for two-wheeler owners. Therefore, the cost of maintenance is low.

3. Zero tailpipe emissions

An electric vehicle facilitates reducing your carbon footprint due to the absence of tailpipe emissions. This also has a sizeable impact on environmental change. Also using renewable sources of energy such as solar panels helps in reducing the cost of electricity.

4. Financial incentives

Another advantage of using Electric vehicles is the lesser registration and toad taxes levied by the local governments. Also, there are multiple subsidies and incentives offered by the state on which vehicles are purchased.

5. No noise pollution

Electric Vehicles have the advantage of silent functionality due to the absence of an engine under the hood. Electric Vehicles run so silently that you have to look at the instrument panel to check if the system is ON. To counter the silence of operations, manufacturers have to add artificial sounds to make pedestrians aware of their presence.

Adopting green modes and technologies

The final pillar of sustainable mobility involves the large-scale adoption of Green Modes and Technologies such as Electric Vehicles and Non-Motorized Transport (NMT).Third party bike insurance are mandatory according to the Motor Vehicles Act, 1988. Comprehensive bike insurance is also advised. Further for improving non-motorized transport, the possible routes and plans should be integrated seamlessly with the public transport system. Also underlining safety for NMT users should be a key priority for outlining norms and dedicated traffic signals.

Further, a definite push towards cleaner and more sustainable technologies is the need of the hour. This requires enabling an ecosystem that heavily relies on domestic manufacturing and the deployment of charging infrastructure. The overall goal should be to reduce emissions.

The accelerated adoption of an electric vehicle is often reliant on significant initiatives taken by public authorities. Such measures, which are primarily aimed at improving the adoption of electric vehicles by taking sustained efforts to reduce the price gap between conventional and electric vehicles have been undertaken by several geographies. They were announced in Norway as early as the 1990s, in the United States in 2009, and in China in 2014. The best practices for developing and implementing electric mobility are stated below:

a. Setting a well-defined electric mobility roadmap.

b. Setting clear targets for effective implementation.

c. Easily accessible and specific incentives for early and large-scale adoption.

d. Effective administration at the sub-national level for implementation.

The Ministry of Power issued consolidated guidelines and standards for charging infrastructure on the 14th of January 2022. The key highlights of such standards are as follows:

● The owners may charge their electric vehicles at their residences and offices using their existing electric connections.

● The exhaustive requirements for public charging stations have been clarified.

● The tariff for the supply of electricity to public EV charging stations would be a part of a single tariff and would not exceed the average cost of supply till 31st March 2025.

● Public EV charging Stations would be required to tie up with at least one Online Network Service Provider to ensure remoting bookings.

● At least one EV charging station shall be available in a grid of 3X3 km.

● Public EV charging stations may obtain electricity from any power generation company through open source.

● Connections would be provided to Public EV Charging Stations within 7 days in metro cities, 15 days in other municipal areas, and 30 days in rural areas.

Conclusion:

So, whether you buy an EV now or keep the decision pending for later, this is definitely a very fast-paced industry and lots of interesting developments are on the way.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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