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videos | IST

Deep Dive: Delhi's electric vehicle policy may hold key to the state's pollution problem

India's capital New Delhi has a pollution problem, and the tens of thousands of combustion engine vehicles on its roads should take a large share of the blame.
Increasing the number of electric vehicles on the road could be one way of addressing the issue, feels the Delhi government, which has come out with a comprehensive electric vehicle policy.  By boosting demand for clean vehicles, the policy aims to get 500,000 EVs--mainly two-wheelers and three-wheelers--on Delhi's roads by 2025,
"The sole purpose of the Delhi EV policy, and there will be spillover into other benefits, is to reduce pollution," says Jasmine Shah, Vice Charirperson, Dialogue & Development Commission of the Delhi government.
But why two-wheelers and three-wheelers?
"When we were deciding the scale and of subsidy and what sectors to go after in this policy, because you cannot push for all sectors, , says Shah.
"The western model of EV adoption has been led by cars and the Teslas of the world leading the market. In India, however, especially in the capital city, two-thirds of the pollution is from two and three-wheelers," Unless & until you can achieve mass adoption in these segments, you're not going to achieve the objective of electrification," she says.
According to Shah, the EV policies of most other states are attracting manufacturers, but not exactly addressing the core issue of demand generation.
"Delhi's is the first policy that addresses it squarely. It is something to be emulated by others", Sohinder Singh Gill, Director, Society of Manufacturers of Electric Vehicles (SMEV) and CEO, Hero Electric, India's largest selling electric-two wheeler company told CNBC-TV18.
EVs in India are expected to grow by about 40-45 percent this year over last year, with sales in different states varying based on the effectiveness of each state’s EV policy over-and-above the FAME scheme.
According to Suraj Ghosh, Principal Analyst, IHS Markit, the two-wheeler and three-wheeler segments are expected to benefit the most, with 11-14 percent 18-22 percent additional growth possible in the two categories.
"For the four-wheeler (Passenger Car) segment, the policy coverage is limited to only the first 1000 cars registered, hence, we think the effect would not be too noteworthy. The only positive is that, unlike FAME II, it does provide coverage to retail/private customers.", Ghosh added.
EVs for last mile
While the policy in its current form stops short of making the use of EVs in any segment mandatory, Shah says there is room to explore such possibilities in the future.
The Delhi government may look at making EVs in segments such as logistics and goods carriers which go several times around the city mandatory in future, as the product penetration and the pipeline for new products builds up.
The policy recognises logistics services like last-mile deliveries and goods-carriers to be attractive low-hanging fruits for EV adoption and has rolled out comprehensive benefits for e-goods carriers too.
For instance, owning an electric three-wheeler is now much easier thanks to an open-permit system that the Delhi EV policy has introduced. For electric goods carriers, no-entry restrictions into the city have also been done away with.
"From the regulations around permits that the government has done away with, to road tax which has been done away with, to the coherent approach around EV charging or swapping stations which gives clarity to discoms to support the govt to data sharing with the government, the policy hits the home in all respective areas in terms of what needs to be done, now the question is execution," said Goldie Srivastava, co-founder and CEO, SmartE.
"The policy encourages and incentives transporters and e-commerce players to invest in EV logistics, and the unit economics for e-commerce players are great which makes it a win-win situation," Srivastava said.
SmartE, the largest organised player in the passenger electric three-wheeler market in India, has been adding electric goods carriers to its fleet since last year, and is already working with leading e-commerce giants to deploy these vehicles for deliveries around the city.
While the policy's a hit on most fronts, there is a miss which is baffling manufacturers and customers alike.
Exclusion of subsidy for low-speed electric two-wheelers
Low-speed electric two-wheelers account for over 90 percent of electric two-wheeler sales in India. Before the announcement of the new policy, the Delhi government used to offer a flat Rs 5500 discount on these vehicles, which has now been withdrawn. Automakers believe this will dampen demand for these vehicles as the upfront cost of acquisition goes up. E-scooter dealers are also having to educate potential customers who walk in expecting greater subsidies on lower-speed scooters after the new policy.
"I came for a test drive after hearing of Delhi government's EV policy," Ram Gopal Yadav, a customer at a Hero Electric dealership told CNBC-TV18.
"I had heard the government is giving Rs 30,000 subsidy, but here I learnt it is only offered on high speed vehicles, and not low speed. The Rs 5500 subsidy being offered on low speed scooters earlier should be continued to be given as they are the ones being used currently. As there are no charging points anywhere, one cannot take them far," Yadav said.
The government believes it is time for the market to move up to better-performing high-speed e-vehicles, but vehicle makers believe the push shouldn't come at the cost of a large existing market.
"The earlier incentive of Rs 5500 (on low-speed e-scooters) has been withdrawn when we were actually expecting more. Around 90 percent of the people will now be deprived of these incentives, so the volumes may not come immediately. We will now have to build to the volume of 5 lakh units that the government is targeting from scratch", Gill said.
While the industry has, by and large, hailed Delhi govt's EV policy and considers it a model for other states to follow, its success will depend on execution and how well implementation challenges such as delays in subsidy transfers and lack of clarity around documentation are eventually ironed out.