NEW DELHI: Subsidies offered under the Delhi government's recent electric vehicle (EV) Policy 2020 for retail consumers could trigger faster EV penetration in the national capital territory, ratings agency ICRA said on Tuesday.
Accordingly, the ratings agency said the policy seeks to drive rapid adoption of battery electric vehicles with the goal of reducing air pollution in the nation's capital.
"It offers subsidies, waivers, and incentives on purchase of EVs on the one hand and dis-incentivises use of conventional viz., Internal Combustion Engine (ICE)-based vehicles on the other," the agency said in a statement.
"The incentives will be offered across segments like electric two-wheelers (e-2W), e-rickshaws (3W), goods carriers, electric cars, and buses and will be incremental to those offered under the FAME-II scheme."
According to the agency, 2Ws are the dominant mode of commute in India and with the ongoing pandemic, the preference for personal vehicles is expected to increase further.
"The subsidies and incentives offered under the scheme for retail consumers and manufacturers could, therefore, give a long-needed push for faster EV penetration and development of this ecosystem in New Delhi," the statement said.
As per ICRA, coupled with the FAME-II incentives, the upfront e-2W prices would become 25-30 per cent lower than conventional 2Ws (for basic models), thereby proving to be a catalyst for accelerated e-2W penetration.
"We believe that the policy holds multiple attractive propositions for the potential e-2W customers. The concern for deteriorating air pollution conditions in the national capital had already been gaining momentum for the past many years," Shamsher Dewan, Vice President, ICRA, said in the statement.
"With a progressive EV Policy in place, the 2W customers will be able to contribute towards alleviating the situation while benefiting from the lower upfront cost as well as total cost of 2W ownership."
Dewan said the high upfront cost of the e-2W vis-a-vis conventional 2Ws has been one of the main hindrance to faster e-2W penetration, which will get addressed through the attractive incentives under the policy.
Besides, the ICRA pointed out that scrappage incentive is a first of its kind in an EV policy, whereas industry response to the requirement of matching participation by OEMs or dealers and de-registration of conventional 2W remains to be seen.
"In addition to sizable cost savings to both the consumer and the government (on crude imports), several non-economic factors are also conducive for faster electrification in 2W segment, like lower dependence on commercial charging infrastructure, range per charge meeting daily commute requirements, growing environment and health concerns, among others," added Dewan.