Concept Of Having All-electric Car By 2030 Will Not Be Ideal For India: SMEV
Society of Manufacturers of Electric Vehicles (SMEV), which works closely with NITI Aayog, Ministry of New & Renewable Energy, and Ministry of Heavy Industry and State Nodal Agencies for the implementation of electric mobility across many Indian states and union territories, ironically doesn’t buy the concept of having all-electric car fleet in the country by 2030. In an interview with BW Businessworld, Sohinder Gill, CEO- Hero Eco and Director- Corporate Affairs, SMEV shares his belief that fossil fuel-run vehicles should coexist with zero emission vehicles and eliminate traditional engines is not in the larger interest of the nation.
How has the EV industry performed during last financial year and what are your sales projections for this year?
The EV industry, excluding E-rickshaws, managed to sell 25,000 units during FY 2016-17. Out of the total units sold, two-wheelers accounted for a sizeable chunk at 23,000 units and the remaining 2,000 units were electric cars. We don’t include e-rickshaw (approx 50,000/ annum) as they are not part of the organised market. So our sales projections depend largely on what kinds of incentives are offered by the government under the FAME 2 Scheme. But hypothetically, we are hoping that the volumes will double during this fiscal.
Do you think leasing of e-vehicles by the government would be a viable proposition to propagate sustainable mobility in India?
The discussions by the government (on leasing e-vehicles) have been restricted to e-rickshaws in order to bring unorganised players into the ecosystem. These are forward-looking policies to encourage traditional cycle rickshaw operators to upgrade to battery-operated vehicles. From that point of view, it is a very laudable objective. That will ensure that the cost of ownership will not pass on to rickshaw drivers. But how will it get translated (to volumes) needs to be seen. This is because the government is making purchases of say 50,000-1 lakh e-ricks from its own resources and then lease it to drivers who want to run it on a monthly rental basis. Moreover, the batteries used in these products will be Lithium-ion batteries only and will be swappable. It will be provided on a Pay per Month or Pay per Use basis. This is a unique model for India and has not happened in other countries. Wherever it was tried in cars (overseas), it has failed miserably.
Recently, the government announced GST rates for e-vehicles? Do you think your industry will get a boost because of a single rate of taxation?
When we had met the Finance Minister, we requested for a 5 per cent GST rate. At that point of time, he had ensured (GST rate of) not more than 12 per cent (for EVs) without making any commitment (for a 5 per cent rate). So we are somewhat fine with the revised rates. The only hitch is that VAT has already become zero in some states like Rajasthan, Uttarakhand, etc. So there will be a hike in prices in certain important states because of the jump in tax rates. Had there been a standard 5 per cent tax (on e-vehicles), all the states would have been equally benefited. But now, only certain states where taxes are already very high stand to gain. Other issues that have cropped up are that we are giving batteries separately rather than fitting it inside the vehicle. That results in 16 per cent extra incidence of taxes if the battery is sold separately. So we have written to the ministry to make sure such anomalies in the taxation system are addressed.
What are your views on Tesla coming to India?
Tesla needs to see what is suitable for India and what the customers would buy even if given a free choice. So if Tesla comes with the intention of setting up charging points in the country, it will have a positive impact on the automotive industry. Leaving aside their sales of about a few hundred cars, India is not ready for big volumes. In fact, India is not ready for any electric car of either B or C segment. This is because it would cost three times the normal cars and the govt is not going to subsidise unless there is a Make-in-India initiative behind it. Therefore, an exorbitant import duty has to be imposed on fully imported cars. So what is required is mass transportation like e-ricks, taxis and buses. For example, Ola is planning to have 1,000 of e-taxis in its fleet.
As the Energy Minister spoke about having all-electric car fleet by 2030, does this augur well for fostering e-vehicle industry in the country?
Nowhere in the world has any Minister made such an ambitious statement. Even though I am a big advocate of electric vehicles, I don’t believe in moving away completely from one technology like ICE to another one. This will have its negative impacts too. For example, if there is a global surge in electric vehicles and India too follows suit, petrol prices will crash. So if the fuel is available at the price of a mineral water, nobody will go for an electric vehicle. As soon as the crude oil consumption turns out to be low, the taxes on GDP will drop by at least 2 per cent. As soon as that kitty that is running into lakhs of crores of rupees dries up, the govt will be forced to offset losses by jacking up electricity rates. So even though electric vehicles should get a boost, a 100 per cent electric car market doesn’t look implementable.
