The Indian government is working on ways to incentivize consumers to purchase electric vehicles with a target to have a 100% electric car fleet by 2030.
The Minister for Power, Coal and New & Renewable Energy Piyush Goyal recently stated that his government is looking at innovative ways to have people purchase electric vehicles without the need for any subsidies. The minister did share some of the thought process the government is working on and clarified that nothing has been finalized yet.
Goyal proposed that people could purchase electric vehicles with zero down payments, meaning no upfront payment, and then payout the cost of the vehicle in installments from the savings they realize on petroleum products.
This proposal is similar to what the government has already managed to accomplish from the Domestic Efficient Lighting Programme. Under this scheme, energy efficiency companies sold LED lamps to homeowners at a fraction of the market rates. The energy efficiency companies recover the total cost in very small installments added to homeowners’ electricity bill every month.
While the Indian government has very ambitious plans in the electric mobility segment, end-consumers have shown little interest so far, most likely due to lack of basic infrastructure to support electric vehicles; supply of electricity for vehicles is yet another challenge with millions still awaiting electricity access in the country.
In 2014, the government considered providing a subsidy worth Rs 14,000 crore ($2.5 billion) to electric and hybrid car manufacturers. The government would deliver the subsidies to the car manufacturers, the benefits of which would be passed on to the end customers. The government increased the subsidy for manufacturing electric vehicles from Rs 123 crore ($19 million) in FY2016-17 to Rs 175 crore ($27 million) in FY2017-18.
National Electric Mobility Mission
Under the 2020 plan of the National Electric Mobility Mission (PDF), the government plans to create a potential demand for 5 to 7 million electric vehicles, including buses, light commercial vehicles, two-wheelers and three-wheelers, as well as electric cars.
The subsidy initiative seems to be a part of government’s 2020 plan to invest up to Rs 23,500 crore ($4.3 billion) by 2020 to promote demand and create a sustainable infrastructure for the electric automotive industry. In 2012, the government announced plans to pump in $2.5 billion by 2020 to spur demand for electric vehicles. The balance of $1.75 billion would be invested by the government and the industry to develop power and charging infrastructure and in research and development.
According to the government, the $2.5 billion subsidy to be offered to the auto industry until 2020 would help the country save about $11 billion on fuel costs.
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