A Primer: States that are Poised Lead India’s EV Revolution

Electric vehicle sales so far has been inconsistent under the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) program. While some states have made good progress, many states are well behind in EV adoption.

According to data by the Department of Heavy Industries’ official website, Maharashtra is leading when it comes to the number of vehicles sold under the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) scheme. The state leads with 32,402 Electric Vehicles (EVs) sold so far, followed by Gujarat (30,686) and Uttar Pradesh (25,531). However, there are a few states in which the EV sales has been almost non-existent. These states include Meghalaya (three vehicles sold), followed by Tripura (81) and Manipur (51). As of October 10, 2018, only 253,513 vehicles (including two wheelers, three wheelers, four wheelers and buses) have been sold across the country under the scheme since its inception in 2015.

EV Adoption Under FAME Program Lagging in Most States

Graph showing number of vehicles sold across states under the FAME scheme. (Source: https://www.fame-india.gov.in/)

“High EV sale in Maharashtra can be attributed to the state’s aggressive strategy. Moreover, Maharashtra is highly urbanized with big cities like Mumbai, Pune, and Nagpur and this factor might contribute towards the numbers game,” said Sohinder Singh Gill, director general and official spokesperson, Society of Manufacturers of Electric Vehicles (SMEV).

While Maharashtra, Uttar Pradesh, Karnataka, Andhra Pradesh, Telangana, and Kerala have EV policies in place, Gujarat is yet to put an EV policy in place, but still enjoys a strong showing under the FAME program.

“Higher sales in Gujarat have several contributing factors, like more availability and visibility due to local manufacturing of EVs, higher economic activity and some local initiatives. Having said that, clear policy and government backed initiatives will certainly help and boost sales even more,” Pratik Gupta, founder and chief executive officer, Strom Motors told Mercom.

“EVs work best in level terrain and that can be another reason why Western states like Gujarat and Maharashtra are faring well. Moreover, standard of living plays its role too,” said Gill.

While some states have come up with EV policies providing various subsidies to consumers, and others are expected to follow suit, the EV industry in India is still faced with multiple pain points. The high price of lithium batteries, lack of up-to-date technologies, funding crunch, insufficient testing facilities, and scanty charging stations are only some of the roadblocks, according to industry experts.

“EVs are far more superior to Internal Combustion Engine (ICE) cars in performance and reliability, but unless standard offerings have a range of 200-300 kms on a single charge, mass adoption is difficult. With the present high prices of lithium batteries in India, these EVs are almost three times as expensive compared to ICE models. Without government initiatives and a more focused approach, if India does not act quickly to facilitate key technology transfers and establish the next Giga-factories with the help of the private sector, it may limit the growth potential of EVs for the next several years,” said Pratik.

Many manufacturers complain that regulatory bodies lack awareness about EVs. “Many of the regulatory bodies in the states are not aware of the registration procedures for EVs. Moreover, availing loan facility for EVs is another tough nut to crack,” said M. H. Reddy, chairman, NDS Eco Motors Pvt Ltd.

“Availability of funding has been a major issue.  Testing facilities are non-existent at the correct price points. The existing eco system is unfavourable and resistive for EVs in India. China, for example, presently has 437 manufacturers of EVs. We can build much better vehicles than China and our products carry a much better reputation across the world,” says Rushen Chahal, founder, Hriman Motors LLP.

“Lack of a stable policy and clarity on part of the government is the biggest fear factor in the industry. There should be a long-term plan supporting EVs in place, so that investors are encouraged to invest. Moreover, the supply-chain must be streamlined as well. Currently, we are relying completely on imports,” Gill elaborated.

Mahesh Babu, chief executive officer at Mahindra Electric, agrees.  In an email to Mercom, Babu states,  “Similar to all industries in their developing stages, EVs come with their own set of challenges. Awareness of EVs and their benefits, government policies, charging infrastructure, technological development, and cost of raw material are some of the challenges faced by this sector. Apart from this, for both the government and original equipment manufacturers (OEMs), the current market size poses a challenge on technology cost versus affordability. We are hopeful that a stable long-term policy will soon be announced to address this.”

The road ahead for EVs could get better, given the remodelling of some of the policies around EVs. “Currently, the government is extending non-fiscal subsidy on EVs, but it’s about time that fiscal subsidy is brought into the picture. This will help increase the number of vehicles on the road. Moreover, the central government should pitch in with tax benefits. Tax benefits on loans for commercial EVs could probably do the trick,” said Gill.

When it comes to the charging infrastructure, industry experts see it as a chicken and egg scenario. “The companies looking at EV charging are waiting for the vehicles and the probable vehicle customers are waiting for the charging infrastructure. Awarding tradable carbon credits for EV and low emission vehicle manufacturers is the step in the right direction,” says Pratik.

Overall, industry stakeholders are optimistic about the future of the EV industry. “The EV industry in India is still in its nascent stage with sales only accounting for less than 1 percent of total vehicles sold. With these low volumes, reading into state-wise numbers might not give a clear picture. This could be a local phenomenon and the others might just catch up,” says Rushen.

FAME-I was originally launched for a two-year period between April 1, 2015 and March 31, 2017. This was done at an approved outlay of ₹750 million (~$11.56 million). Later, the scheme was extended for six months until September 30, 2017, again until March 31, 2018, and a third time until September 30, 2018.

The government recently decided to yet again extend the duration of the FAME program aimed at facilitating the widespread adoption of electric vehicles.

This time, the government has extended the program for a duration of six months or until the second phase of the program is implemented, whichever is first.

Mercom previously reported that the central government has already approved a subsidy corpus of ₹55 billion (~$0.78 billion) to be disbursed under the second phase of Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) program. The FAME II program will be in effect for five years.

“While all the right things are being said about the importance of EV by law makers, there is still a long way to go when it comes to developing EV infrastructure,” said Raj Prabhu, CEO of Mercom Capital Group.

Garima is a staff reporter with MercomIndia.com covering renewable energy news. Prior to Mercom, Garima worked as a journalist with The Times of India and The New Indian Express. She received her Master’s degree in Environmental Science from the University of Nottingham and PG Diploma degree in journalism from the Times School of Journalism.