World over, electrification of vehicles is the new norm. India needs to adapt to this new reality
Back in April, Union Minister for Coal and Power, Piyush Goyal, told an audience of business executives that the Government aimed to have an all-electric car fleet by 2030. This aim put India in line with many other countries across the world where there has been a major push towards electrification of vehicles. However, despite some obvious sales success in the unregulated market for e-rickshaws, India is far from putting much of the infrastructure required to support a huge fleet of electric vehicles by 2030. Over the past five years, electric car manufacturers, such as Tesla, have taken massive strides in dealing with the image of electric cars. The first was to deal with the so-called ‘range anxiety’ — the worry that electric car owners have, that their vehicles will not make it. With improvements in battery technology and car software to improve performance, many modern electric cars are more than capable of doing a long daily commute. However, to ensure that this is made as easy as possible, there needs to be investment in ‘supercharging’ stations where an electric car can be sufficiently charged under half an hour, a feature similar to those some smartphones offer. However, all-electric cars, despite subsidies, continue to have a huge sticker price and remain playthings of the wealthy.
However, despite advances, electric cars, buses and trucks may not be the solution for long-distance travel and internal combustion engine will continue to survive, albeit smaller capacity engines in hybrid cars. Indeed, some of the world’s most expensive supercars are taking hybrid technology to the limit, combining the best of electric and fuel technologies in hybrids that offer incredible performance with astoundingly frugal fuel consumption. This is because supercar manufacturers realise, like Governments should, that buyers are not altruistic. They will invest in a hybrid supercar if it offers great performance. Boffins in the Indian Government realise that as well and have conceptualised the FAME scheme to give small subsidies to hybrid and electric carmakers and some State Governments had given some tax breaks as well. However, the newly introduced Goods and Services Tax rates have perversely increased the taxation on hybrid cars. While this was possibly to punish one particular manufacturer for twisting the definition, it has damaged the prospects of some state-of-the-art hybrid vehicles by making them expensive. If the price differential between a hybrid and a petrol car is made that large, it makes no economic sense for car buyers to go down the hybrid route. Hybrid cars are the stop-gap between today’s internal combustion vehicles and all-electric cars until the latter becomes more affordable. Volvo might be showing the way, possibly because their largest market, China, has a strict electric and hybrid target by 2025. It is crucial that the Government elucidate the ambition for its all-electric a bit better.