Automakers won't focus on passenger cars in EV drive

After uncertainty on the policy front on electric vehicles, automakers are seeing some clarity over its future with the government unveiling draft automotive policy.

While the government took a U-turn from its earlier position of coming out with an EV-specific policy, the automakers – mainly the ones who have invested in EVs – are now looking forward to meet with different departments in the government for getting some further clarity on the issues.

The draft automotive policy unveiled last week speak of a 'technology agonistic' green mobility road map through evolution of emission and fuel consumption standards, along with incentive plan and related infrastructure investments.

Company insiders DNA Money spoke to said despite the U-turn, the draft policy mandates that EV segment will grow in fleet, public transport and in government departments.

They will now focus on these segments as the demand from passenger car segment will take time till an efficient supporting ecosystem is rolled out.

There has been some uncertainty over the policy with Union transport minister Nitin Gadkari saying a day before the unveiling of the draft auto policy that "there is no need for any policy now (on EVs)".

Sohinder Gill, global CEO, Hero Electric, and a spokesperson for Society of Manufacturers for Electric Vehicles (SMEV), told DNA Money, "From what I can make out from minister Gadkari's recent statement, he was referring to passenger cars and not the two-wheelers, three-wheelers and other public transport vehicles."

The draft auto policy highlights the need for lower import duties on capital goods, equipment and machinery for manufacture of new technology components. The policy proposes that central and state governments would purchase a minimum 25% green vehicles from 2023 and 75% from 2030; and 50% of all vehicles from 2023 and 100% of all vehicles from 2030 procured by municipal corporations in metros.

Mahesh Babu, CEO, Mahindra Electric (earlier Mahindra Reva), said the government-backed Energy Efficiency Services Ltd has announced one of the largest tenders of EVs in the world for 10,000 vehicles.

"The processing of this tender is underway and the resultant adoption can already be noticed. NITI Aayog has also released reports on standards and policies around charging. This was contributing in the formalisation of Bharat Charging Standards." said Babu.

Babu said currently he did not expect any additional policy push. The current support under FAME and special tax structure for EVs should be continued for at least the next two years. FAME, or Faster Adoption and Manufacturing of (Hybrid &) Electric vehicles, is a policy aimed at incentivising all vehicle segments covering hybrid and electric technologies like mild hybrid, strong hybrid, plug in hybrid and battery EV.

"Existing schemes are being implemented on the ground and the resultant increase in EV adoption should start showing in the next 1-2 year time frame" Babu said.

Another senior executive at M&M had earlier said that they have tried to play safe despite investing considerably in the EV segment. After government last year during the GST implementation gave tax incentives to pure EV vis-a-vis to hybrid vehicles, M&M went slow on hybrid cars but did not completely shelve it. "We never closed the other options while investing in EVs. Because one can never be certain with the policies of the government".

A spokesperson at Tata Motors, which in the past year has geared up extensively for EV play, did not comment on the change in government policy, while a Honda Cars India Ltd (HCIL) official said that they are still trying to figure out the ground situation.

Shekar Viswanathan, vice chairman & whole-time director – Toyota Kirloskar Motor, said that the state level EV policies will have a key role to play, as a concerted effort to achieve reduced emissions and fuel imports. "We also recognise that it is the customer who will drive the choice of technology that we will adopt based on his/her needs of travel distance, safety and total cost of ownership." Viswanathan said.

Maruti Suzuki India Ltd chairman R C Bhargava is reported to have said that companies will now have the flexibility to choose a technology they want. "So, if there isn't a policy on electric vehicles, it is not a problem at all," said Bhargava.

Sridhar V, Partner, Grant Thornton India LLP, said, "The draft auto policy has been fairly thought out to put the industry on the path to become the third largest country in the sector. It plans to provide a conducive atmosphere and platform encouraging R&D, facilitating training and skills availability bringing in a socioeconomic approach to development conscious of space and environment. Green ability is the core."

GREEN RIDE

• The policy proposes that central and state governments would purchase a minimum 25% green vehicles from 2023 and 75% from 2030
   
• About 50% of all vehicles from 2023 and 100% of all vehicles from 2030 procured by municipal corporations would be green.