India’s ambitious electric vehicle plan looks a ‘thus far and no further’ story

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"There is no need for any policy now,” Nitin Gadkari, minister for road transport said in a press meet in New Delhi Thursday last. Amitabh Kant, CEO of Niti Ayog - the government's planning arm, was also present in the meet.

The meet was the one that just followed the inauguration of two electric vehicle charging stations installed by ABB at Ayog headquarters, and Gadkari was speaking about government’s electric vehicle (EV) plans.

This is the self-same Gadkari who had  in September last said that he wanted oil-fuelled car sales in the country to come down drastically to curb the menace of air pollution. “You may not like it, but I wish it from my heart that your growth should be less. If this growth continues, I will need to add one more lane to national highways, which will cost a whopping Rs 80,000 crore,” he said.

He was addressing the annual meet of the Society of Indian Automobile Manufacturers. He took the audience, mostly industry insiders, by surprise when he added he will do all he can to ensure that the strategy draws along well.

This is again the same Gadkari who had almost a month ago said that a comprehensive policy on EV was waiting for approval from the Cabinet.

Thus, the current shift in focus is a volte-face of unprecedented proportion and is capable of catching the attention of anyone, especially industry insiders, a prospective EV buyer, or a climate activist.

Much though the media would project it as an unpremeditated move, the facts clearly belie their stance.

A close look at the budget presented earlier this month will show that there was nothing in it that reflected the government’s tall talk on this, and Gadkari’s statement is nothing more than just a confirmation of the same.

After having steadfastly advocated the manufacture of EV for over a year, the government  has now suddenly applied brakes pushing the horizon of ‘All-electric cars by 2030’ dream farther.

A clear policy roadmap with incentives for manufacturing cars is what EV manufacturers have been looking for, before going ahead with their strategies. Auto component makers such as Renault and Bosch have for long clamored for a clear EV policy. Car manufacturers such as Renault India, Mercedes Benz, FCA India had earlier said they didn’t have any EV plan for India in the pipeline. A national policy on EV would certainly have cleared the air of all perceived uncertainties that automakers have in their minds.

Gadkari’s latest salvo, “there is no need for any policy now,” points to another direction. The minister’s statement interestingly comes at a time when different states such as Maharashtra and Telangana are coming up with EV policies to create an enabling environment for manufacturers.

The salvo also comes at a time when major EV manufacturers, the world over have expressed their willingness to set up manufacturing units in the country. The latest in this array are Chinese electric bus maker BYD, UK-based Dyson, Italian carmaker Lamborghini, Hyundai, Tata Motors, Mahindra & Mahindra, Ashok Leyland, TVS Motors, Hero Electric and Bosch.

Society of Manufacturers of Electric Vehicles (SMEV) says there are about 4.15 lakh electric two-wheelers, 18 lakh electric three-wheelers and over 6,000 electric four-wheelers plying currently on Indian roads. SMEV expects the total EV sales figure in India to touch 6.88 million by 2020.

Tata Power, NTPC, JSW Energy, BHEL, ONGC and PGCIL are engaged in the making of charging and supporting infrastructure in the country to cope with such a big leap in numbers as well.

Further, with the international pressure mounting on India to reduce its carbon footprint, the government has been giving a push for renewable energy usage all these while. EV adoption would enable India to save on its foreign exchange hugely – a whopping US$60 billion per annum – besides cutting down on emissions.

Why then the government doesn’t want a right kind of  EV policy in place?

There could be several reasons. In between the push and pull of EV makers and conventional vehicle manufactures,  the government might  not want to lose sight of a huge amount of money involved in implementing such a policy, which it is reluctant  to commit as of now.

Aspiration is one thing   the circumstances that translate it into reality are quite another. Maybe the government is getting to realize how such a sudden jump can lead to unpleasant consequences that will do more harm than the intended good to the country and its economy. Technological limitations in transforming the entire oil-driven vehicle fleet to EVs in a short time could be another reason.

The costs of lithium-ion batteries needed to power EVs are expected to come down over a period of time. As India sets up large lithium-ion batteries manufacturing plants the costs are expected to come down. However, it is  a costly affair as of now.

Thus, the main challenge will lie in reducing the cost of lithium-ion battery if India wants to meet its target of a fully electric fleet on the road by 2030. A report by NITI Ayog and Rocky Mountain Institute titled ‘India’s Energy Storage Mission’ says that the country needs at least 20GW battery production capacity to achieve this.

These things currently make EV a costly thing for a buyer. Maybe the government wants to take all these into account before streamlining a policy in the area.

However, the picture is incomplete as long as the ‘concerns’ of conventional vehicle manufacturers are not drawn in it.  Companies such as Toyota Kirloskar Motors have reportedly aired their concerns publicly about the proposed EV policy. So the current government stance should presumably be music to their ears.

Perhaps the government is in a wait and watch mode so that it can come clearer on the policy front later. Kant says: “Technology is ahead of rules and regulations. We cannot bind it. The government will take a final call on whether a policy is required or not.”

It is possible that policy makers want EV manufacturers to decide the best course of action and arrive at their own, viable solutions by themselves.