Electric Vehicles

What are Electric Vehicles? What are its benefits and challenges? Are there any government initiatives? To answer these questions, read further.

India is currently the fifth-largest vehicle market in the world and has the potential to become one of the top three soon.

The Paris Agreement‘s global climate agenda is the driving force for the demand for electric vehicles (EVs). It aims to cut carbon emissions to reduce global warming.

Vehicles that run entirely or mostly on electricity are referred to as electric vehicles. Electric vehicles are particularly environmentally friendly. They consume little to no fossil fuels, have fewer moving components that need to be maintained, and have minimal operating expenses.

India needs a transportation revolution. And shift towards the Electric Vehicle is a positive step in this direction.

Benefits of Electric Vehicles

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• Electric vehicles (EVs) require less maintenance because they have fewer moving parts.
• They are an alternative to combustion engines powered by fossil fuels, which discharge harmful greenhouse gases into the atmosphere. India has pledged to reduce the intensity of GHG emissions by 33% to 35% below 2005 levels by 2030.
• The adoption of electric vehicles is consistent with India’s pledge to lower carbon emissions and provide renewable energy sources more support.
• EVs are economical and unaffected by escalating geopolitical tensions or rising oil prices.
• They can lessen India’s reliance on the gulf countries for fuel imports.
• It provides a catalyst for future innovation in mobility- and hybrid-based technologies.
• EV production will benefit regional industries and expand India’s homegrown manufacturing sector.
• Setting up new production and charging systems infrastructure will improve skill-building programs and create more jobs. Thus providing employment.
• It will aid in bringing more effective transportation, such as e-rickshaws, which may be advantageous for rural economies.
• There is a demand for more environmentally friendly and sustainable transportation solutions due to rising urbanization.

Challenges of Electric Vehicles

• The government first prioritized car standardization with FAME. However, this effort was neglected in favor of an emphasis on manufacturing.
• In India, the average price of an electric vehicle is roughly INR 13 lakh, which is significantly more expensive than the INR 5 lakh average for fuel-efficient vehicles.
• It is quite expensive to set up the infrastructure for charging these vehicles, buy the land for charging stations, and buy the components.
• India depends on China for its electric vehicle parts because China is currently the world’s largest exporter of those parts.
• The manufacturing of such vehicles requires highly technical abilities, which are now in short supply in India. These abilities must be developed on a vast scale.
• The installation of charging infrastructure is challenging in several areas of India due to the inadequate electrical supply.

Government Initiatives

• FAME India: As part of the program, 11 cities are receiving subsidies to introduce electric buses, taxis, and three-wheelers.
• National Electric Mobility Mission Plan 2020: By 2020, it aims to deploy 5 to 7 million electric vehicles nationwide, indicating the importance of government incentives and collaboration between businesses and academia.
• Concessions on the GST: The government levies a 5% GST on electric vehicles. On the other hand, it charges a GST of 28% on internal combustion automobiles.
• Go Electric Campaign: At the beginning of 2021, the government launched the Go Electric campaign to promote the use of electric vehicles and kitchen appliances and to ensure the nation’s energy security.

In news

2024: The Union Government has approved a scheme to promote India as a manufacturing destination so that e-vehicles (EVs) with the latest technology can be manufactured in the country.

• The policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers.
• This will provide Indian consumers with access to the latest technology, boost the Make in India initiative, and strengthen the EV ecosystem by promoting healthy competition among EV players leading to a high volume of production, economies of scale, lower cost of production, reduced imports of crude Oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment.

The policy entails the following:

• Minimum Investment required: Rs 4150 Cr (∼USD 500 Mn)
• No limit on the maximum Investment
• Timeline for manufacturing: 3 years for setting up manufacturing facilities in India, starting commercial production of e-vehicles, and reaching 50% domestic value addition (DVA) within 5 years at the maximum.
• Domestic value addition (DVA) during manufacturing: A localization level of 25% by the 3^rd year and 50% by the 5^th year will have to be achieved
• The customs duty of 15% (as applicable to CKD units) would be applicable on vehicles of minimum CIF value of USD 35,000 and above for a total period of 5 years subject to the manufacturer setting up manufacturing facilities in India within 3 years.
• The duty foregone on the total number of EVs allowed for import would be limited to the investment made or ₹6484 Cr (equal to incentive under the PLI scheme) whichever is lower.
• A maximum of 40,000 EVs at the rate of not more than 8,000 per year would be permissible if the investment is USD 800 Mn or more. The carryover of unutilized annual import limits would be permitted.
• The Investment commitment made by the company will have to be backed up by a bank guarantee instead of the customs duty forgone
• The Bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines

Way Forward

The NITI Aayog has suggested priority and non-priority lanes and designated parking places for charging automobiles.

Urban Planning is required. Area-wise integrated planning of public transportation, promotion of electric vehicles (EVs) and renewable energy sources, with flexible electricity pricing and tools for monitoring and controlling the Smart Grid.

Battery management and handling regulations from 2001 are strictly enforced to limit any adverse effects on the environment.

Plans for skill development and education curriculum should be updated to meet industry standards.

The Make in India program can help with the production of EVs and the parts that go into them. In fact, according to some studies, this might boost the nation’s GDP over the following years.

Other initiatives that could aid in scaling up EVs in cities are local plans for EVs, subsidies, designated parking, and associated incentives.

Electric vehicles can significantly contribute to the global effort to prevent climate change by contributing to the reduction of emissions and reliance on fossil fuels. India has evolved into a global leader on the issue of climate change. Since transportation accounts for 80% of emissions, a gradual transition to electric vehicles is essential for a sustainable environment.

Read: Vehicle-to-grid technology

Article written by Chetna Yadav.