Will 2020 see re-birth of electric vehicles? Experts think so

'In 2020, we might see the re-birth of electric cars, with their positive image driving sales. It could become part of a customer's lifestyle statement. Though the numbers could be less, the excitement among citizens would be more.'

T E Narasimhan reports.

The year 2019 was a mix of ups and downs for electric vehicle (EV) sales in the country. The new year is expected to be better, with the entry of more electric cars and Chinese entities' entry, bringing down the average cost.

The second phase of the Rs 10,000-crore scheme of the central government, termed Faster Adoption and Manufacturing for Hybrid and Electric vehicles (FAME II), offers higher incentives to higher powered products.

It excludes lead acid battery-powered two-wheelers and mandates that e-scooters should have 80 km per charge and a minimum top speed of 40 kmph, with at least 50 per cent localisation in manufacturing.

This has left a large share of two-wheelers out of the incentive, says CRISIL Research.

Recently, Union minister Prakash Javadekar told Parliament about 285,000 buyers of electric/hybrid vehicles had been supported by a subsidy of Rs 360 crore under FAME.

Sohinder Gill, director-general, Society of Manufacturers of Electric Vehicles (SMEV), said, "The year 2019 was full of turmoil for the EV industry. Sudden policy shock by the government in March 2019 led to a decline in sales of electric two-wheelers under FAME II. It has made companies becoming less dependent on government subsidies."

The number of electric two-wheelers sold under FAME in the first six months of this financial year (April to September) saw a 94 per cent decline to around 3,000 units, from 48,671 units in the same period last year.

The number sold without FAME incentive in the period went up to around 49,000 units, 2019, from around 10,000 during the same period last year, said SMEV.

Low-speed lithium battery vehicles without the FAME incentive cost around Rs 55,000. The high-speed electric two-wheeler costs around Rs 80,000 after the incentive applied, said sources.

The number of electric cars within the FAME scheme of under Rs 15 lakh cap sold during April to September almost halved to 340.

They do not include the numbers of Hyundai's Kona, launched in July, according to the Society. Reports say only around 1,500 electric cars for personal use have been sold so far during the financial year.

Some of the positive developments were entry of leading players into the EV business, state governments announcing policies and customers becoming more aware of the benefits of such vehicles.

The goods and services tax (GST) for EVs was cut from 12 per cent to five per cent in July. The GST rate on charger or charging stations for EVs was also reduced from 18 per cent to 5 per cent.

The central government also announced additional income tax deduction of Rs 1.5 lakh on interest paid on a loan to buy an EV, apart from duty exemptions for some parts.

2020

"In 2020, we might see the re-birth of electric cars, with their positive image driving sales. It could become part of a customer's lifestyle statement. Though the numbers could be less, the excitement among citizens would be more," hoped Gill.

In the two-wheeler category, there was entry of Bajaj, TVS and Revolt in the market, hitherto driven by established players like Hero Electric and Ather. People could become more brand conscious.

The e-rickshaw market seems likely to remain dominated by the unorganised sector. Authentic players in the three-wheeler segment might partner with municipal bodies, battery manufacturers or fleet operators. It would be a test year for e-buses.

"Overall, we anticipate the market to grow by 100 per cent," said Gill.

BIS Research says the EV market is anticipated to grow at a compounded annual rate of 43.1 per cent, charging infrastructure at 42.4 per cent and the battery market at 60.1 per cent during the period from 2019 to 2030.

"Despite the Indian automotive industry experiencing a sharp decline in FY19, the EV market is expected to continue to grow in the coming years. With the BS-VI (emission) norms becoming applicable from April 2020, EVs will become more price-competitive with conventionally fuelled vehicles, thus accelerating sales," it added.