NEW DELHI: The Union Minister of Road and Transport, Nitin Gadkari, on Thursday said that there is no need for further subsidies to push electric vehicle (EV) adoption in the country.
The minister cited that decreasing battery costs and growing adoption will make EVs more affordable in the coming years.
“Consumers are now choosing electric and compressed natural gas (CNG) vehicles on their own and I do not think we need to provide much subsidy for electric vehicles…,” Gadkari said at BloombergNEF Summit in New Delhi.
“The GST on petrol and diesel vehicles is 48% and the GST on an electric vehicle is only 5%. Still, after getting 5% GST, if someone is expecting subsidy from the government, my honest opinion is now we don’t need subsidies.”
He projected that EVs will reach price parity with internal combustion engine (ICE) vehicles within two years. Gadkari’s statement comes a day after when heavy industry minister H D Kumaraswamy announced that the government will be rolling out the third phase of FAME (faster adoption for manufacturing of hybrids and electric vehicles) scheme in the next one to two months.
Gadkari said the subsidies on EVs were introduced when the cost of lithium-ion batteries was high. The cost of lithium has come down from $150 per kilowatt per hour to about $107-$108 kilowatt per hour. He added that now five companies are starting to manufacture lithium-ion batteries and within two years, cost may come up to $90 kilowatt per hour. “When it comes to $90, cost of the diesel, petrol vehicle, and EV will be the same,” he said.