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While the aim is to achieve an EV penetration rate of 30% by 2030, meaning 30% of the total vehicles sold in 2030 should be electric, we have been able to reach just 7.7% in 2024. This was after about nine years of effort. Getting to 30% in the next five years will, therefore, need a considerable step-up from business as usual. New and more aggressive measures will be needed to accelerate the pace of this transition.
For that, several challenges need to be overcome. The high capital cost of the vehicle—even if operating costs are low—has proven to be a major barrier, especially in the case of electric buses and trucks. Inadequate coordination in setting up charging stations and providing timely power connections has been another barrier. Locating charging stations on the basis of where land is conveniently available without taking into account the movement patterns of vehicles has had its limitations. Inadequate awareness of the benefits of EVs has been yet another challenge.
In recognition of these challenges, especially in India’s unique context, some important changes are necessary.
First, while financial support for the procurement of EVs and setting-up of charging facilities has helped kick-start the transition, these are not enough. Some kind of regulatory mandates are necessary.
To begin with, these can be limited to vehicles responsible for a large share of the road pollution, such as buses, trucks, para-transit and urban freight vehicles. This subset constitutes a relatively small share of India’s total fleet, but is responsible for a disproportionately high share of the exhaust pollution. In particular, buses and trucks constitute only 4% of the vehicle fleet but are responsible for 50% of emissions. Hence, these need to be targeted on priority.
Second, rather than trying to transition the entire spectrum of ICE vehicles to electric at the same time, it would be better to start by moving a subset of vehicles. Priority should be accorded to those that travel longer distances in a day. They should also be those for which it is easier to provide a charging ecosystem. Therefore, buses and trucks are important, as they travel very long distances in a day and require charging infrastructure only at concentrated locations.
Similarly, an electric shift of para-transit vehicles in cities and urban freight vehicles will also have significant benefits because they travel long distances and yet need charging facilities only at limited locations. Two wheelers are a good option too because they constitute almost 75% of our vehicle fleet and most of them are able to charge at home.
Personal cars could be lower down in the priority list as they constitute only 13% of our vehicle fleet and do not travel very long distances. Besides, they require a wide distribution of charging facilities, which is harder to provide in the initial years.
Third, rather than spread the transition too thinly across the country, it would be better to look at saturation in a few regions to demonstrate the impact of EV adoption and generate enthusiasm for replication. To this end, five cities could be identified for a 100% transition of buses, taxis, autorickshaws and freight vehicles over the next five years. This could be scaled up to 20 cities in the following five years.
The fourth is the need to enable easier finance, especially for trucks and buses. Since these vehicles cost almost three times their diesel counterparts, financial institutions are hesitant to lend for them as they have serious concerns about the repayment capability of borrowers. As a result, whenever they do lend, it is at high interest rates. Blended finance schemes to help lower the cost of capital would be very helpful. Alternatively, mechanisms that help shift capital costs to operating costs, such as vehicle leasing deals, can facilitate finance.
Fifth, batteries are a very important component of EVs and constitute almost 40% of their total cost. Current battery chemistries predominantly use lithium, nickel and cobalt, which are not available in India. Thus, they make us overly dependent on imports.
There is a need to undertake aggressive research to identify new battery chemistries that use materials available in India. This would go a long way in our atmanirbharta (self-reliance) efforts. An industry-academia-government partnership would help create a support system to speed up the research.
Sixth, interministerial and Centre-state coordination is necessary to ensure that the larger ecosystem for EVs functions smoothly. This has been a challenge as there are considerable delays in charging stations getting power connections and finding suitable land at appropriate spots. Poor choice of charging station locations makes such stations unviable, thereby deterring new investments. Further, the GST regime is not entirely aligned with the larger objective of promoting EVs and may need to be streamlined.
Institutional mechanisms of ensuring coordination will go a long way in overcoming many barriers.
Seventh, many seem to be unaware of the benefits of EVs and thus resist the transition. Resistance by some resident welfare associations to charging stations being set up in residential zones is an example. Hence, an aggressive awareness-building programme will be useful.
India can certainly meet its target of 30% EV penetration by 2030, and even more ambitious targets in succeeding years, but ‘business as usual’ will not get us there. Several changes are needed to fully unlock the potential of EVs, reduce greenhouse gas emissions, lessen India’s import bills and make our cities cleaner.
These are the authors’ personal views.
The authors are, respectively, chief executive officer and distinguished fellow, Niti Aayog.
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