India’s vehicle industry needs EV mandate, finds CSE study – EQ Mag
Mandate for production and sale of e-vehicles will help manufacturers increase supply, diversify e-vehicle models
Regulations that mandate the vehicle industry to have a certain percentage of their production and sales as zero-emissions vehicles (ZEV) is the need of the hour, found a new assessment by Delhi-based non-profit Centre for Science and Environment (CSE) released January 16, 2023.
India offers several incentives, but the share of EVs in the market remains minuscule — only about 4.72 per cent, according to the VAHAN database of the Union Ministry of Road Transport and Highways.
The annual Auto Expo — The Motor Show 2023 began in Greater Noida January 15, 2023. Several innovative electric vehicles were launched at the event, including a solar car, a three-wheeler powertrain kit and a military utility vehicle.
However, a greater push is needed to meet the country’s India’s targets and global pledges.
An industry mandate might be the way to go, agreed representatives from different vehicle segments in a consultation meeting and dialogue organised by CSE. The meeting was with the vehicle manufacturing industry, government and other target groups, with technical support from thinktank CITI Forum.
The representatives from segments like two- and three-wheelers, cars and buses took a varying and conditional view of the prospect of implementing a ZEV mandate.
However, all supported this strategy in the meeting, a press note by CSE said. A mandate can bring longer-term policy visibility and more certainty in investments and markets.
Incentives for consumers and fleet operators to purchase EVs such as the central scheme Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME II) and EV policies of state governments, need an additional lever of ZEV mandate, said Anumita Roychowdhury, executive director, research and advocacy, CSE.
Roychowdhury said: The mandate will require manufacturers to sell a minimum specified number of ZEVs as a share of their overall sales in the market is necessary to push the zero emissions transition.
India’s targets are:
- Ministerial announcements of 30 per cent electrification by 2030
- Thinktank NITI Aayog’s ambition of 70-80 per cent electrification of the two- and three-wheeler markets by 2030
- India signing on to the global ZEV declaration of 100 per cent transition by 2030-2040, with specific mention of two- and three-wheelers.
CSE conducted a dialogue with urban transport experts and state transport corporations, besides a retail consumer survey for the assessment. An assessment of markets and price trends and a review of policy instruments like the ZEV mandate and fuel economy regulations as accelerators for a ZEV transition backed this.
The share of EVs in new vehicle registration is led by two- and three-wheelers showed the VAHAN database. The next level of challenge is to expand electrification in all vehicle segments.
Targets set under FAME II are yet to be fully realised, as well, said CSE. Just 6,630 e-two wheelers against the target of 10,000; 5,375 commercial e-four wheelers against the target of 55,000 and 3,738 buses against 7,000 have been sanctioned, according to data released in December 2022.
The price parity of EV models with internal combustion (ICE) vehicles has improved considerably in the two- and three-wheeler segments said Roychowdhury.
“Personal cars do not get any incentive. If cars are put to commercial use, then the combined incentives can reduce the price by 22.16 per cent. Our study shows that it will take longer for cars and buses to achieve price parity,” she said.
A sales requirement puts downward price pressure on electric vehicles, CSE said. Vehicle manufacturers or original equipment manufacturers (OEMs) are positive about the growth prospects, but the response varies across vehicle segments.
OEMs also prefer a lower-bound ZEV mandate that can be implemented in a phased manner from 2025 to 2030.
The industry has identified several barriers, ranging from high up-front costs, public hesitancy in adoption and lack of options for public charging infrastructure and low battery range. More support is needed to remove these roadblocks.