BackElectric mobility mission faces infrastructure, finance hurdles
Absence of adequate charging infrastructure an issue; financiers not keen on offering credit for electric vehicles as they have low resale value
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The government’s ambitious National Electric Mobility Mission Plan (NEMMP), which intends to put seven million electric and hybrid vehicles on the road by 2020, may face hurdles from the lack of charging infrastructure and inadequate financing facilities.
Sales of such vehicles have seen a sharp rise after the government rolled out a subsidy scheme—FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles) in April—as part of the NEMMP.
But the absence of adequate charging infrastructure—a prerequisite for electric vehicles—can impede growth, said Sohinder Gill, president, Society of Manufacturers of Electric Vehicles (SMEV). Besides, financiers are not keen on offering credit for electric vehicles as they have a low resale value. This too has been discouraging the buyers, said Gill. The centre could step in and incentivize banks, especially the public sector ones, by way of subvention to offer loans at a competitive rate, he said.
The subsidy scheme has seen the sales of electric two-wheelers tripling to 21,000 units in April-December 2015, as against 7,000 in the same period in 2014. Sales of Mahindra e2o, India’s only electric car, also tripled to 1,300 units in April-November 2015, compared to the same period in 2014, according to SMEV.
The FAME scheme has prompted manufacturers to launch full and micro hybrid models. Some of the notable ones include the Toyota Camry hybrid and the Mauti Ciaz hybrid. The SMEV doesn’t compile sales data on hybrid models.
As part of the subsidy scheme, depending on the speed and efficiency of the vehicles, buyers of electric and hybrid vehicles have been getting an upfront discount equal to one-third of the difference between the price of that particular vehicle and a comparable petrol model.
The manufacturers get reimbursed by the centre for the discount in 60-90 days. The higher the efficiency of the vehicle, the bigger the subsidy.
But there is no effort so far to put the necessary infrastructure, such as charging stations, in place, said Gill., adding this may prevent the centre from meeting the targets set under the scheme. Faster adoption of electric vehicles cannot happen unless there is infrastructure support.
Others agree with that view.
Consumers need the assurance of not just the technology that is backing the car or the plethora of benefits it offers, but also the commitment of the government in terms of infrastructure, said Arvind Mathew, chief executive officer at Mahindra Reva Car Co. Ltd. “Unless that happens, it will be an uphill task for manufacturers like us," he said in an email response.
The centre’s FAME scheme did identify charging infrastructure as an area that needed attention in order to meet the targets set. The other three areas include technology development, demand creation and pilot projects.
Officials at the department of heavy industries, which administer the NMMP, were not available for comment.
Mathew said that the government has recently partially funded a fast-charging network in Bengaluru, but added that this is only a start. “There is so much more that needs to be done to make electric vehicle purchase a viable proposition," he said.
On whether the partial ban on diesel cars in Delhi and the growing concern on air quality will accelerate the sales of vehicles with alternative propulsion systems, Mathew said while it won’t have a direct impact on the sale of electric/hybrid vehicles, it has certainly triggered the need to seek greener options.
Experts believe that the drive for electric vehicles in India will not be easy. Considering the short distances over which two-wheelers ply and the costs involved, setting up charging points for two-wheelers in the top 10 cities should be the first step, said Abdul Majeed, auto practice leader at PwC.
On Monday, Pune-based Automotive Research Association of India said that it is collaborating with the Vikram Sarabhai Space Centre to develop a battery for passenger cars using technology that is used to make batteries for space vehicles. It will develop the batteries and offer to transfer the technology to manufacturers for mass production to bring down the cost.
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