Electric vehicle makers seek lift for e-commerce transport

Even as the government contemplates doing away with subsidies for private electric cars and instead focus on shared-mobility vehicles operators such as Ola, Uber, the electric vehicle manufacturers now insist that a similar push be provided in the commercial vehicles (CV) space, including that for vehicles used for logistics by the e-commerce companies.

According to policy makers, incentives provided to private electric cars did not serve its purpose as it failed to substantially push the car sales. Instead, the policy makers expect the initial growth in the EV sector will come from the fleet vehicles which travel for longer distance during the day.

The Society of Manufacturers of Electric Vehicles (SMEV)- a lobby group of EV manufacturers such as Mahindra & Mahindra (M&M), Tata Motors, Hero Group, Ashok Leyland, etc. among others - wants the government to also focus on the CV sector, including the e-commerce space, by making it mandatory for them to use certain number of EVs in their entire fleet. “ The same policy should be adopted across the sector and not just for fleet taxi business” said an official from SMEV. “Also, the term period for the benefit from the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) should be extended, typically for 3-4 years”.

The industry experts claim that the FAME-I failed to push sales of EV cars because the government failed to set up a proper eco-system, including the charging stations. As a result, there are only a few range of EVs available in the Indian market. The reason behind the vehicle manufacturers pushing for a FAME subsidy in e-commerce space stems from the fact that the latter is among the rising sector and has been generating a lot of demand for CV manufacturers.

According to India Brand Equity Foundation (IBEF)- a trust established by the Department of Commerce, Ministry of Commerce and Industry, the Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. India’s e-commerce industry is expected to grow from $38.5 billion as of 2017 to $200 billion by 2026. India’s internet economy is expected to double from $125 billion as of April 2017 to $250 billion by 2020, majorly backed by ecommerce space. The industry witnessed 21 private equity and venture capital deals worth $2.1 billion in 2017 and six deals worth $226 million in January-April 2018. E-commerce startups in India have received $66 million of funding in January-March 2018.

FAME- 2 is the second phase of the incentive scheme provided to electric vehicles consumers in India. The first phase, called as FAME-1, was introduced in 2015 and offered incentives on hybrid and electricity vehicles of up to Rs 29,000 for two-wheelers and Rs 1.38 lakh for cars. While phase 1 has been extended until September 30, or till the phase-2 gets approved by the union cabinet. Phase-2 of FAME will get a financial support of about Rs 9,381 crore for around five years.

According to industry experts, the EV industry is at a nascent stage in India. It is less than 1% of the total vehicle sales, but has a potential to grow over 5% in next few years. At present there are more than 4 lakh electric two wheelers and few thousand electric cars plying on Indian roads as the industry volumes have been fluctuating, mostly depending on the incentives offered by the government. More than 95% electric vehicles are low-speed electric scooters (less than 25km/hr) that do not require registration and licenses.

Interestingly, SMEV earlier this month had written to heavy industries minister Anant Geete, objecting to certain anomalies in the proposed FAME 2 incentives segment of electric tow-wheelers , claiming that the government is erroneously promoting some electric two-wheelers that are not only costlier to own and run than the petrol version but also waste a lot of electricity and precious lithium.

Drawing the attention of the minister towards certain set of e-scooters, Sohinder Gill, director, SMEV in the letter says, “...seem to be more for the rich customers, shall we say rich boy toy that costs much more, consume more electricity and do not have advantage of running costs over petrol scooters.”

...& ANALYSIS

• Industry experts claim that the FAME-I failed to push sales of EV cars because the government failed to set up a proper eco-system, including the charging stations
   
• E-commerce startups in India have received $66 million of funding in January-March 2018
   
• $200 billion India’s e-commerce market expected to grow by 2026 from $38.5 billion as of 2017
   
• $250 billion internet economy in India expected to double by 2020