Faster Adoption and Manufacturing of Hybrid and Electric Vehicles

India’s Air pollution has been growing at an alarming rate. The NCR and other metro cities are mostly affected by the pollutants which have led to rising in diseases like- asthma, premature death, and strokes due to particulate matter.

In recent years due to economic growth, India is having a tremendous rise in sales of vehicles. Rise in the level of incomes, urbanization and population growth has lead to an increase in sales of cars and vehicles. Due to many diesel and petrol vehicles, there has been rise in Carbon Monoxide, Nitrogen Dioxide, Particulate matter, and Sulphur Dioxide.  

 Delhi government tried odd-even scheme, banned construction work for certain days in recent years to curb the pollution.

 However, the pollution is not slowing down. There are not only health hazards but also environmental issues which impact the entire planet. India has challenges to manage it.

FAME SCHEME 

 India introduced FAME Scheme to help Indian automobiles to offer incentives on hybrid vehicles. Fame stands for faster adoption and Manufacturing of Hybrid and Electric Vehicles.

 This is applicable in all over India for two /three wheelers and for four wheelers at the selected area. It has been launched under National Electric Mobility Mission Plan (NEMMP) with an aim to promote eco-friendly vehicles in the country.

In order to promote manufacturing of electric and hybrid vehicle technology and to ensure sustainable growth of the same, department of Heavy Industry is implementing FAME- India scheme –phase 1 was implemented from 1^st April 2015. The scheme which was initially up to 31^st April 2017 has been extended up to 31^st march 2019. Or till Notification of FAME –II, whichever is earlier.

The phase- II of the FAME scheme proposes to give a push to electric vehicle in public transport and seeks to encourage adoption of EV’s by way of market creation and demand aggregation. The draft scheme envisages the holistic growth if EV industry, including providing for charging infrastructure, research and development electric vehicle technologies and push towards greater indigenization.

Total outlay of phase-I of the FAME- India scheme has been enhanced from Rs. 795 crores to Rs- 895 crore.

Some focus areas and details

Under Demand creation focus area, the purchaser of electric vehicle and hybrid vehicles is given an upfront reduction in purchase by the dealer at the time of purchase of old electric vehicles.  Since inception of scheme & till 6^th December, the government has given financial support (demand incentive) to about 2, 61,507 electric/hybrid vehicles. 

Sedition Charges

119 models of vehicles of 27 original equipment manufacturers got registered under FAME- India scheme for availing demand incentive.

Several segments have been added to the scheme so as to ensure that more people take advantage of this scheme. The positive results of these efforts are borne out by the fact that DHI has so far sanctioned 455 electric buses for 9 cities in a pilot scheme launched on 31^st October 2017, which got interest from 44 cities seeking 3144 e-buses.

India’s Electric Mobility Transformation Report

NITI Aayog a think tank of India government and rocky mountain institute has released a report on April 6^th 2019 – titled “India’s Electric Mobility Transformation: progress to Date and Future Opportunities”. The report analysis the opportunities for the automobile sector and government under the FAME II scheme

Key features of the report

The electric buses covered by FAME II will account for 3.8 billion vehicle kilometres travelled over their lifetime. There would be considerable energy and CO2 savings associated with two-, three-, and four wheelers and buses covered by FAME II over their lifetime, as well as the potential savings associated with greater adoption levels by 2030.

In order to capture the opportunity potential in 2030, batteries must remain a key focal point since they will continue to be the key cost drivers of electric vehicles.

Vehicle eligible under FAME II scheme can cumulatively save 5.4 million tonnes of oil equivalent over their lifetime worth Rs 17.2 thousand crores.

Get Now!

Electric vehicles sold through 2030 could cumulatively save 474 million tonnes of oil equivalent worth Rs 15 lakh crore and generate net CO2 savings of 846 million tonnes over their operational lifetime.

Challenges in India

Availability of lithium India does not have adequate lithium reserves to facilitate manufacture of lithium –ion-batteries. Besides, china has been trying to establish a monopoly on lithium reserves by acquiring assets in countries that have rich lithium reserves such as Bolivia, Chile etc. thus securing lithium supplies could be a major challenge for India.

Poor manufacturing base the lack battery manufacturing in India further make the Indian electric vehicles market dependent on china for imports just s solar power developers’ source cheap modules and equipment from china. This does not augur well for the local industry.

Enabling environment electric vehicles would also require charging infrastructure to be set up in tandem. Currently, electricity sales in the country are regulated under the electricity Act and can be carried out with distribution license from SERCs. To set up a pan-India charging infrastructure, an overhaul of existing regulations is needed.

Besides, there is no plan for the government to develop nationwide charging infrastructure. On the contrary, it sees this as an opportunity for commercial operators did discoms. But for electric vehicles to become convenient and popular, developing charging infrastructure is crucial.

Managing power electric vehicle can load the distribution networks with a surge in demand, thus burdening regular power supplies infrastructure. EV loads, being of intermittent nature, will have to be managed.

High infrastructure costs involved-currently the cost of setting up a rapid-charging outlet ranges close to INR 25 Lakh, while that of a slow charging station will be around INR 1 lakh. Building an extensive network of charging stations would, therefore, require substantial investments.

More expensive electric vehicle is costlier than traditional cars on account of the cost of lithium-ion batteries that make up nearly 50% of total costs. Further, Electric vehicles are costly on account of the components used in them.

Performance Electric vehicle cars are not as fast as a conventional vehicle. Besides, laxity in safety standards of equipment used in Electric vehicle manufacturing also impinges on their safety.

A Way Forward

India needs active participation from the auto industry to ease electric mobility transition. The auto and battery industry could collaborate to enhance customer awareness, promote domestic manufacturing, promote new business models, conducts R&D for electric vehicles and components, consider new business models to promote electric vehicles.

India’s electric vehicle market is poised for growth with a blend of policies, such as FAME II and the automotive industry’s willingness to provide new mobility solutions to the citizens of the country. Such transformation will create enormous economic, social and environmental benefits for Indians.

The government should focus on phased manufacturing plan to promote electric vehicles, provide fiscal and non-fiscal incentives for phases manufacturing if electric vehicles and batteries. Different government departments can consider a bouquet of potential policies, such as congestion pricing, ZEV credits, low emission/exclusion zones, and parking policies among others to drive adoption of electric vehicles.