It is quite evident that electric vehicles are the future of the automobile industry. For a long time, we have relied on fossil fuel-based vehicles, but now, the time has come for us to commit ourselves to an electric future. According to a report by Mordor Intelligence, the Indian electric vehicle market was valued at US $5 billion in 2020 and is expected to reach US $47 billion by 2026, registering an impressive CAGR of more than 44%. That being said, there are a few obstacles that are hindering the growth of the electric vehicle industry in the country which need to be addressed. These are as follows:
Lack of charging infrastructure: While several EV manufacturers have released models with batteries that offer great economy and range, the lack of charging infrastructure is dissuading many potential buyers. However, many state governments have noticed this problem and have jumped into action.
Range anxiety: Since this issue is closely linked to the lack of charging infrastructure, improvements in that regard would help alleviate this concern. Swappable batteries can also help solve this issue to a great extent.
Forging the future
Regardless of the challenges, the electric vehicle industry is growing rapidly and in time, the few challenges that it’s facing will be addressed – especially since the government itself is focusing on incentivising EV adoption and manufacturing.
Recently, the government has made some modifications to the Faster Adoption and Manufacturing of Electric Vehicles in India scheme (FAME II). According to these amendments, the demand incentive for electric two-wheelers (e2W) has been increased by 50% from ₹10,000/kWh to ₹15,000/kWh. The maximum cap on incentive for electric two-wheelers has also been increased 20% of vehicle cost to 40% of vehicle cost. An increase of this magnitude in demand incentive (in the form of higher subsidy) will help bridge the price gap between EVs and ICEs and promote EV adoption in the country.
To boost production in the country, Niti Ayog, during September 2020, announced incentives worth $4.6 billion by 2030 for companies manufacturing advanced batteries, starting with cash and infrastructure incentives of $122 million in the next financial year, which would then be ratcheted up annually. Moreover, the Delhi government has approved more than 100 models of vehicles, including 45 makes of e-rickshaws and 12 of four-wheelers, for subsidy under the new electric vehicles policy.
All the electric vehicles priced up to ₹15 lakhs will be eligible for the subsidy, besides exemption of road tax and registration fee. Although the vehicles priced more than ₹15 lakhs will not get the subsidy, they will still be eligible for road tax and registration fee exemptions.
Besides these moves, the government has also adopted a policymaking approach that seeks to favour FDI. India already has an abundance of manpower and resources, and by collaborating with foreign technology partners, we can certainly become a global manufacturing hub for electric vehicles. So, not only would the growth of the electric vehicle industry make the country cleaner and greener but it would also contribute massively to economic growth – which is extremely important in the current times.