Union Budget 2024:
In the interim budget speech today, Finance Minister Nirmala Sitharaman announced a plan to boost the electric vehicle (EV) sector. The government promised to bolster the EV ecosystem by supporting manufacturing and charging infrastructure.
“Our Government will expand and strengthen the e-vehicle ecosystem by supporting manufacturing and charging infrastructure. Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanism," Sitharaman said.
The payment security mechanism is a US-India joint financial security mechanism that aims to incentivise manufacturers to set up manufacturing hubs in India to address the financial challenges in e-bus adoption.
Additionally, a solarisation scheme targeting one crore households was also mentioned by Sitharaman as catering to EV charging needs.
"Through rooftop solarisation, one crore households will be enabled to obtain up to 300 units of free electricity every month. The following benefits are expected:
a.) Savings up to fifteen to eighteen thousand rupees annually for households from free solar electricity and selling the surplus to the distribution companies;
b.) Charging of electric vehicles," Sitharaman said.
As EVs face challenges like high upfront costs and limited charging infrastructure the government's push aims to overcome these barriers.
Data from the Bureau of Energy Efficiency revealed that 6,586 public charging stations were operational in India as of March 21, 2023.
The top nine cities in India, each with a population of over 4 million, will need 18,000 public electric vehicle (EV) charging stations by 2030, the government has said.
An Outlook Money feature published in 2022 found that EVs face challenges with an average 8-hour charging time when without fast charging options. Combine this with limited charging points, and your long trips might have suffered.
But now advancements in technology of fast chargers have significantly improved the charging landscape. As per the Bureau of Energy Efficiency, some electric vehicles can charge from 20 per cent to 80 per cent in about half an hour on these chargers.
The average range of electric cars available in the market is between 150-200 km per charge.
Despite these advancements, EVs still come with high upfront costs compared to traditional vehicles. For instance, The petrol base model of the Tata Nexon EV is currently priced at around Rs 8.10 lakh ex-showroom (Mumbai). The diesel base model is priced at Rs 10.99 lakh ex-showroom and the cheapest EV model is priced at Rs 14.47 lakh ex-showroom.
So the price difference is over 6 lakh from the petrol variant. After checking multiple models of Tata vehicles, it is evident that in every model there is a difference of around Rs 4 lakh between the petrol and electric variant. But government incentives like a Rs 1.5 lakh tax benefit under Section 80 EEB on the interest amount on a loan for an EV can reduce upfront costs.
Experts told Outlook Money that high upfront costs currently disadvantage EVs in overall cost comparisons with petrol and diesel vehicles over 10 years. But EVs score by a huge margin in terms of cheaper monthly running costs.
Still, there are concerns regarding battery life and its replacement cycle for EVs. While manufacturers claim an 8-year battery life, practically it is around 4 years, many experts told Outlook Money then. Currently, many manufacturers are providing warranties of 5 to 8 years on batteries.
Maintenance costs are significantly lower due to their simpler mechanical design. EVs are less noisy too, and their power delivery helps in faster pick-up in city traffic, as against ICE cars.
State government incentives and tax credits can further sweeten the deal. With experts predicting that EVs will capture half of the market within the next decade, economies of scale are expected to drive down prices. The government's charging infrastructure boost will accelerate this transition towards faster EV domination on roads.