In one fell swoop, the central government has wriggled out from its commitment to come up with a comprehensive Electric Vehicle (EV) policy; and it comes as music to the ears of the fossil fuel-guzzling car makers! Addressing media persons a few days ago in New Delhi, Nitin Gadkari, Union minister for road transport, said: “There is no need for any policy now.”
Speaking alongside Gadkari, NITI Aayog chief executive Amitabh Kant justified the minister’s words: “What we need is action plans. Technology is always ahead of rules and regulations. And in India it becomes very tough to change rules and regulations; so let there be just action.”
This is a clever way of telling the nascent electric car industry, which is fighting the big gasoline car-making Goliaths: Guys, you are on your own now!This is a big U-turn. In June last year, minister of state for renewable energy, Piyush Goyal boldly announced the country would only sell electric vehicles (EVs) by 2030; and that the government would come out with a supporting road map soon. The government proclaimed to worldwide applause that its EV policy would reduce the oil consumption bill by $60 billion a year and emissions by 37 per cent. To indicate it means business, the Modi government came out with a tender for purchasing 10,000 electric vehicles through the state-run Energy Efficiency Services (EESL).
Big auto makers hit back
The rattled traditional car manufacturers pressed the panic button and began a specious campaign. Mercedes-Benz India MD and chief executive Roland Folger said last December: “By 2040, the whole world will be driving home hydrogen cars. To me, the whole plan to go electric nationwide looks like a rushed idea.” It is diversion-speak to talk of ‘hydrogen technology’ when EV technology is here and kicking as an environmentally sustainable model.
The International Energy Agency’s (IEA) 2017 Outlook Report reveals Norway as the EV world leader and it has already achieved 29 percent market share of electric cars followed by Netherlands at 6.4 percent. For those who thought that an EV policy is a Western conspiracy should look towards China which is today the largest electric car market accounting for more than 40 per cent of EV sales in the world. The IEA report also reveals that worldwide electric car stocks in 2016 doubled from the previous year, surpassing the two million mark.
But at this nascent stage, electric cars need policy support from government. “A supportive policy environment enables market growth by making vehicles appealing for consumers, reducing risks for investors and encouraging manufacturers willing to develop EV business streams on a large scale,” says the IEA Outlook Report.
Policy support is key
A key area of support is for incentivising research, particularly, research on reducing cost of the lithium ion batteries, a key feature of EVs. Today, EVs are more expensive by 2.5 times than equivalent traditional car models, making cost a huge deterrent. Financial incentives in the form of tax breaks, and reducing GST to zero or near zero is another way of making EVs an attractive proposition. A differentiated tax imposition on the level of emissions and fuel efficiency is already in place in countries like South Africa, China and Canada, and India could well follow the lead. Similarly, a slew of municipal measures can help tilt the scales.
These could include bans on access for fuel guzzlers to inner city areas; or a total ban on diesel vehicles as announced by Paris and Mexico City by 2025. It could also take the form of incentives such as rebates and waivers on road tolls and parking fees as are in place in many Chinese cities.
London has taken exemplary action in this respect, announcing the Ultra Low Emission Zone (ULEZ) policy for 2019. To improve air quality, all vehicles in ULEZ areas in central London will need to meet high-benchmarked exhaust emission standards or pay a daily charge to travel. The London Congestion Charge already in place offers a 100 percent discount for electric cars.
If the Indian government can incentivise solar power, why not electric cars?
India’s EV industry is miniscule. In FY16, just 20,000 electric cars were sold compared to the auto industry’s sale of 3 million passenger cars in 2016-17. Globally, too, electric cars have a long way to go as it accounts for just a tiny 0.2 percent of the stock of the worlds light passenger vehicles. In this scenario, the government taking fright of the challenge of electric cars on behalf of the fuel guzzlers and polluters is indeed deplorable.