After the Niti Aayog’s plan to phase out three-wheeler IC engines by 2023 and two-wheeler IC engines under 150CC by 2025 evoked sharp reactions from the industry, the government think tank is likely to explore electrification of key cities by 2025 rather than a complete ban, sources told CNBC-TV18.
Top executives of more than 16 auto companies met Niti Aayog officials on Friday to share their views on the EV transition plan and while a majority of OEMs (original equipment manufacturers) were dead against any ban, there was some agreement on phased electrification in the most polluted cities.
The Niti Aayog is now contemplating an appropriate middle path which would achieve a fair degree of electrification without a nationwide ban, said the sources.
They added that large and polluting cities may be identified for 100 percent electrification in phase one by 2025 and the phase one experience could be used in planning a phase two which could be more pan India.
Sources privy to the meeting said that the meeting ended in an impasse. While the OEM’s wanted four months to prepare an alternate EV transition plan, the Niti Aayog was not willing to give more than two weeks.
“In two weeks time we can study an industry for a million people and 15 million dollars in sales and give a roadmap - I don’t think that is feasible. We have said we will take four months and they asked to come back in two weeks. I really believe in the long term saner heads in the government will prevail," said
TVS Motor chairman Venu Srinivasan, speaking exclusively to CNBC-TV18.
Srinivasan warned that a hurried transition could make India dependent on China which has a monopoly over lithium and at the same time may not reduce carbon emission as we will continue to substantially produce carbon-based electricity for some time. “If you take from well to the wheel then electric is not greener than petrol. So what are we trying to achieve?” he asked.
Srinivasan suggested that as part of the plan scrapping of older vehicles would help in reducing pollution. “The subsidy that you are offering in electric, if it is used to buy back the BSIII vehicles from the market and scrap them, you will find the pollution dropping immediately."
He emphasised that any transition plan must first focus on polluting cities in urban areas and gradually moves to rural India rather than a complete ban. “What we are saying as an industry is that you take most polluted cities and have a path by saying that by a particular time a certain percentage of those cities will be electric. Every manufacturer will say that if I sell 100 vehicles in Delhi then 40 must be electric and then progressively move to 100. Then you move from Delhi to the lesser polluted cities and gradually over time transition to electric," he said.
Government sources believe that the industry can bear the impact of an EV transition. “Industry is today selling 2 crore vehicles a year. They will grow by 3.5 crores in the next five years. So let that incremental growth be for electric vehicles," said a source. However, officials concede that currently there is no answer to the cost factor. “If a regular motorcycle costs Rs 60,000-70,000 then how can you force someone to buy an EV scooter/motorcycle which costs between Rs 1.2 to Rs 1.5 lakhs? Rather than buying a BSVI two-wheeler, he may continue using a BSIII or BSIV which is more polluting," said an industry source.
Rajiv Bajaj, managing director, Bajaj Auto, who attended the Niti Aayog meeting told CNBC-TV18 that he was shocked to hear that the electric revolution could not take off without a ban on two and three-wheeler internal combustion engines. He said there has been little deliberation on how the ban would affect employment and where the electricity for charging would come from.
“In my view, all that is needed is for government and industry to understand from global battery makers the scale that they need to set up battery manufacturing in India that would significantly lower battery costs to the desired target level. Unfortunately, there were no battery makers at the meeting yesterday and in their absence the event discussions were eventually inconclusive," Bajaj said.
Bajaj added that he fully backs all monetary incentives for the EV transition but is strongly against any mandatory ban on two and three-wheeler IC engines.The Society of Indian Automobile Manufacturers, the industry body representing the auto industry has been asked by Niti Aayog to come up with an alternate plan as the proposal to ban two and three-wheeler IC engines was not acceptable to the industry. It remains to be seen whether the body will submit the plan in two weeks or seek more time.