Despite the COVID-19 induced economic slowdown, the future of the Indian automotive & mobility players seems poised for robust growth in the near future. In fact, some beneficial trends have been accelerated by the pandemic which is currently boosting and will continue to propel a subset of the automotive industry i.e. the electronic vehicle segment. State and central governments are focused on pushing policies that will continue to instigate a lateral shift from petrochemicals to renewable energy driven mobility solutions. Here are the biggest developments that positively impacted the EV industry:
Despite Covid-19, Indian Start-Ups Attracted Investments
Even in a pandemic ravaged economy, investors saw potential in the EV segment and continued to pump in money. Needless to say, the electrification of two-wheelers and three-wheelers is the top priority as they are extensively deployed for public transport and last-mile deliveries. Here are some investments witnessed by Indian start-ups in 2020:
Nonetheless, several automakers have manufactured premium electric cars and ushered them into the Indian market in the last few years. India, therefore, stands at a position of advantage in the global EV ecosystem wherein stakeholders aware of price-sensitive consumerism have plenty of opportunities.
The lockdown encouraged more and more people to opt for a safer commute in private vehicles, a trend that is likely to continue as social distancing and improved hygiene become the new normal. The EV segment has a vast untapped potential that can now be leveraged to solve the problem.
Push For Make-In-India EV Components
The Ministry of Heavy Industries & Public Enterprises (MHIPE), in May 2020, issued a directive to all the testing agencies falling under Faster Adoption and Manufacturing of Electric Vehicles in India (FAME II) encapsulating the eligibility criteria for the Phased Manufacturing Program (PMP). The notification covers parts of all kinds of electric vehicles including hybrids, plug-in hybrids, and fuel cell EVs and promotes domestic manufacturing at each stage of the EV value chain.
Valid until 2024, the PMP lists all parts that must be manufactured and assembled in India, except for the ones listed below:
The date for the indigenization of specific parts has also been pushed further to April 1, 2021, as is visible in the infographic above.
EV Registration & Sales Without Pre-fitted Batteries:
In a landmark move, the Ministry Of Road Transport & Highways (MORTH) declared, in August 2020, that all states including union territories are authorized to sell registered electric vehicles without pre-fitted batteries. In order to not compromise on safety and quality, the Central Motor Vehicle Rules state that EV and battery prototypes must be cleared by test agencies.
The move aims to accelerate the adoption of EVs across the nation.
The Fame-II Program For EVS:
In October 2020, the FAME-II program witnessed a three-month extension in its validity for all approved EV models up to December 31st, 2020. However, it has been able to achieve less than 10 percent of its intended objective of ‘supporting 10 lakh two-wheelers, 5 lakh three-wheelers, 55,000 four wheelers and 7000 buses by 2022’, says the Society of Manufacturers of Electric Vehicles (SMEV).
Contrasting the SMEV’s opinion, the CEO of Ather Energy, Tarun Mehta says that FAME-II is not a demand creation. Policy but more of a push to make the right product for the consumers and that could take 3-4 years. The allocation of funds is only the first step in a series of many to follow still..
Ola pumped 2,400 crores into the erection of an electric two-wheeler plant and Bajaj Auto invested 650 crores to set up their new manufacturing unit at Chakan, both moves following the creation of FAME-II. The policy is definitely attracting investments from legacy players into the EV industry and sales are expected to skyrocket in the next 8-10 years.
Road Tax Exemptions For EVS In Delhi And Telangana:
Delhi: Road tax on all battery-operated electric vehicles has been scrapped by the Delhi government. The move was executed with immediate effect when it was announced in 2020 under the Delhi Motor Vehicle Taxation Act, 1962.
The Ministry of Heavy Industries & Public Enterprises (MHIPE), in May 2020, issued a directive to all the testing agencies falling under Faster Adoption and Manufacturing of Electric Vehicles in India (FAME II) encapsulating the eligibility criteria for the Phased Manufacturing Program (PMP).
Also, in August 2020 the Delhi Electric Vehicle Policy was brought in to further promote the adoption of electric vehicles in the NCR region. The policy offered tax waivers, creation of EV charging & swapping infrastructure and created a State EV fund that was non-lapsing. This measure intends to increase the contribution of EVs to ~25 percent of the total new vehicle registrations by 2024.
Financial Incentives In Delhi:
• E-rickshaws, electric two-wheelers & goods carriers get incentives of INR 30,000
• Purchase of EVs get incentives ranging from INR 10,000 to INR 1,50,000
The government of Telangana also released an Electric Vehicle & Energy Storage Policy for a 10-year period of 2020-30 with announcements spanning subsidies, policies, and incentives to transform the state into an EV manufacturing and energy storage hub.
Financial Incentives In Telangana:
The following are eligible for a 100 percent exemption on road taxes and registration fees:
• First 200,000 electric two-wheelers
• First 20,000 electric three-wheelers
• First 5,000 electric four-wheel commercial passenger vehicles
• First 10,000 electric three-wheel goods e-carriers
• First 5,000 private electric four-wheelers
• First 500 electric buses, and electric tractors
Electric Two-Wheelers To Operate As Taxis:
Guidelines of new motor aggregators suggest that the government is set to allow electric-powered two-wheelers (or eco-friendly fuel consuming vehicles) to be used as taxis. The state governments would be responsible for facilitating this move. MORTH has also given permit exemptions to EVs operating on ethanol and methanol.
These policy measures have attempted to significantly bolster the performance of the electric vehicle segment in 2020. Most of them will yield noticeable results in the coming years as consumers are gradually displaying an increasing inclination towards EVs with greater awareness about their environmental friendliness.