Electric vehicles (EVs) are frequently presented as a panacea for the intractable problem of vehicular pollution. This presumption, however, rests on a partial reading of emissions. A widening body of academic research demonstrates that the climatic footprint of a vehicle is not determined solely by the technology that turns its wheels, but by the entire energy architecture that sustains its motion. When two vehicles of identical mass and horsepower are juxtaposed—one powered by petrol, the other by electricity generated from fossil fuels—the carbon calculus becomes markedly more intricate than tailpipe-centred comparisons suggest.
To grasp this complexity, researchers rely on well-to-wheel (WTW) and life-cycle assessment (LCA) frameworks. These analytical instruments trace emissions from the point of fuel extraction and processing—the “well”—through conversion, transmission, and ultimately energy use at the wheels.
Comparison between internal combustion engines and EVs
A conventional petrol vehicle converts chemical energy into mechanical motion through an internal combustion engine, a process characterised by profound thermodynamic inefficiency. Canonical engineering studies show that barely 15–20 per cent of petrol’s energy content is converted into useful work, with the remainder dissipated as waste heat through exhaust and cooling systems. From a carbon standpoint, the combustion of petrol releases approximately 2.3 kg of CO2 per litre. When upstream emissions arising from crude oil extraction, refining, and transportation are incorporated, the well-to-wheel emissions of a typical petrol car in India fall within the range of 150–180 grams of CO2 per km, contingent upon vehicle efficiency and driving conditions.
Electric motors convert roughly 85–90 per cent of electrical energy into motion. But EVs do not generate energy. They depend on electricity that charges their batteries. EV performance is grid-dependent by design. This dependence becomes decisive in countries such as India, where electricity generation remains overwhelmingly coal-based (more than 75 per cent).
Scenario One: Petrol burned at the power plant
Consider a thought experiment. Instead of combusting petrol within a vehicle engine, the same fuel is burned in a thermal power plant to generate electricity, which is then used to charge an EV. Under real-world operating conditions, thermal power plants convert fuel into electricity at efficiencies of roughly 33–38 per cent. In India, an additional 15–17 per cent of generated electricity is lost during transmission and distribution before it reaches the end user. Charging losses and battery inefficiencies further erode usable energy by approximately 15–20 per cent.
Once these layered inefficiencies are aggregated, the ostensible efficiency superiority of EVs is substantially reduced. Multiple well-to-wheel studies demonstrate that an EV powered by electricity generated from petroleum products yields only a marginal reduction—and in some cases no reduction at all—in CO2 emissions relative to a petrol internal combustion engine vehicle. The apparent advantage dissolves once upstream losses are fully internalised.
Scenario Two: India’s coal-dominated grid
The comparison becomes more fraught when electricity is generated not from petrol but from coal. Coal-based electricity in India exhibits a high carbon intensity, frequently exceeding 800–900 grams of CO2 per kilowatt-hour at the point of generation. When transmission and distribution losses are incorporated, the effective emissions per delivered kilowatt-hour escalate further. Peer-reviewed studies find that EVs charged on coal-heavy grids can emit between 200 and 226 grams of CO2 per km on a well-to-wheel basis.
EVs and the hidden architecture of subsidies
Beneath the rapid global proliferation of EVs lies a dense, often obfuscated lattice of overt and covert subsidies.
Overt subsidies: Overt subsidies constitute the most visible instruments of state intervention. These include direct purchase incentives, tax rebates, reduced registration fees, and production-linked incentives for manufacturers. The United States’ federal tax credit of up to USD 7,500, generous purchase bonuses across Europe, and China’s expansive pre-2022 subsidy regime were central to early EV adoption. Empirical research corroborates this effect. A global econometric analysis finds EV demand to be highly price-elastic: a 1 per cent reduction in effective purchase price increases EV sales by approximately 2.5–3 per cent. Subsidies, in other words, translate into sales more than proportionately.
India’s experience conforms to this pattern. Under FAME-II, combined with GST reductions (from 12 per cent to 5 per cent) and state-level incentives, EV prices—particularly in the two-wheeler segment—were effectively reduced by 30–50 per cent. Empirical studies identify a statistically significant relationship between subsidy intensity and EV uptake, especially for electric two- and three-wheelers.
Covert subsidies: The invisible supports are less conspicuous, yet no less consequential. These encompass publicly financed charging infrastructure, preferential electricity tariffs, subsidised land for battery manufacturing, research grants, relaxed regulatory treatment, and import-duty exemptions for critical components. Globally, such support is substantial: the IEA estimates cumulative public spending on EV charging infrastructure exceeded USD 35 billion by 2023.
In India, most public charging stations are funded or co-funded by central and state governments, while distribution companies absorb part of the cost of preferential tariffs—effectively a cross-subsidy borne by other electricity consumers.
What happens when subsidies are withdrawn?
Cross-national evidence indicates that subsidy withdrawal precipitates price increases and adoption slowdowns, at least in the short to medium term. Germany’s reduction of EV purchase incentives in 2023 was followed by a marked deceleration in EV sales growth. Comparable effects were observed in Sweden and the Netherlands, particularly in private leasing markets. EU-level modelling suggests that eliminating purchase subsidies would significantly curtail EV market share, especially among middle-income households. In the United States, analysis indicates that up to half of early EV purchases would not have occurred absent subsidies.
Indian assessments are not much different. Without FAME-II and associated tax concessions, most mass-market electric two-wheelers and cars would struggle to compete with ICE alternatives, particularly given higher financing costs and persistent range anxiety. Bernstein Research concludes that the Indian EV industry “is not viable at scale without incentives” under prevailing cost structures. In a parliamentary response, the Minister of State for Heavy Industries stated that ₹6,559 crore had been disbursed as EV demand incentives up to 31 March 2025, benefiting 1,616,215 vehicles.
Price scenarios without subsidies
If these subsidies were withdrawn, EV prices would rise through multiple channels:
The removal of direct purchase incentives would immediately raise sticker prices by approximately 10–30 per cent, depending on the segment. The reinstatement of standard GST and road taxes would add a further 5–10 per cent. Infrastructure costs, no longer socialised, would increasingly be passed on to consumers via higher charging tariffs.
In the Indian context, the elimination of direct subsidies, preferential GST treatment, and state-level fiscal support would plausibly raise EV prices by roughly 30–45 per cent overall, fundamentally reconfiguring the affordability calculus that currently sustains EV adoption.
Carbon debt of electric vehicles: Manufacturing, materials, and the limits of decarbonisation
While EVs eliminate tailpipe emissions, this framing occludes a critical dimension: the substantial carbon debt incurred during manufacturing, particularly battery production.
Carbon debt refers to the upfront greenhouse gas emissions generated during raw material extraction, component manufacturing, and vehicle assembly. Life-cycle analysis studies consistently show that EVs leave the factory with higher embodied emissions than comparable petrol or diesel vehicles.
Lithium-ion battery production is the single largest contributor. Mining and refining lithium, nickel, cobalt, manganese, copper, and graphite, followed by energy-intensive cell manufacturing, generate emissions estimated at 60–100 kg CO₂-eq per kWh of battery capacity. For a mid-size EV with a 60–75 kWh battery, this translates into 4–7 tonnes of CO₂-eq even before accounting for the remainder of the vehicle. EVs also require greater quantities of aluminium and copper to offset battery mass—materials whose production is itself highly carbon-intensive.
Battery degradation compounds these concerns. EV batteries typically lose 20–30 per cent of capacity after 100,000 miles. Replacement costs can approach USD 20,000, rendering EV ownership economically untenable for lower-income households. Absent robust recycling systems, discarded battery packs pose serious contamination risks. Battery recycling infrastructure is limited and technologically demanding. In the United Kingdom, tens of thousands of used EV batteries remain in storage, with only a small fraction recycled.
Resource scarcity and geopolitical concentration further complicate the picture. Battery material supply chains are frequently associated with labour abuses and ecological degradation in producer countries, while dependence on a narrow set of processors—particularly in China—renders the EV ecosystem vulnerable to geopolitical shocks.
Carbon payback and policy implications
The environmental case for EVs ultimately hinges on carbon payback: the point at which lower operational emissions offset higher manufacturing emissions. While most LCAs agree that EVs do achieve payback, the distance and time required vary sharply with grid composition. In coal-dominated systems such as India’s, the payback horizon lengthens considerably, rendering decarbonisation contingent on power-sector transformation rather than vehicle technology alone.
EVs eliminate tailpipe emissions but accrue carbon debt during production, generate non-exhaust pollution, and confront binding constraints arising from material scarcity and recycling inadequacies. Their climate advantage is contingent rather than absolute. In India, as elsewhere, EV markets are ineluctably policy-constructed, resting on layered subsidies.
Any sustainable mobility strategy must therefore reckon with manufacturing emissions, end-of-life governance, and material trade-offs—not merely the absence of smoke at the tailpipe.