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Here’s why Road min took U-turn on Electric Vehicles' policy

Centre’s unforeseen U-turn on bringing a separate policy for electric fleet in India could be based on economics of cost and price as government feels the segment is nothing but “uncertain”

February 27, 2018 / 12:43 PM IST
As climate change makes itself more and more felt, fossil fuels are being looked at as something that needs to be changed. In an effort to move towards something more sustainable auto companies have no doubt started moving towards the electric path. And while the road will be long and hard, it is not undoable. Here are the electric cars that are already on sale in India.

As climate change makes itself more and more felt, fossil fuels are being looked at as something that needs to be changed. In an effort to move towards something more sustainable auto companies have no doubt started moving towards the electric path. And while the road will be long and hard, it is not undoable. Here are the electric cars that are already on sale in India.

The Centre’s U-turn on bringing a separate policy for electric vehicles (EV) in India could be based on economics of cost and price as the government feels the segment is nothing but “uncertain”.

Government sources told Moneycontrol that the road ministry has become wary of EVs’ adoption in the country as the road is full of “ifs and buts”.

“Electric vehicles won’t be adopted (by people) unless the cost goes down or unless we have charging infrastructure… Simply, any question about EVs’ acceptance will be faced by a no,” said a senior government official, requesting anonymity.

He said that India lacks the requisite resources to give the impetus for mass adoption leaving their future “uncertain”.

Also read: No need for EV policy as action plan ready: NITI CEO

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“See, the truth is, even if we say that we want EVs by 2025 or 2030… where are the resources to make it happen?” the official said, adding, “Should government really get into a sector which is uncertain? That is the point”.

The push towards electric mobility gained momentum last year when union minister of road transport, Nitin Gadkari, said that India will go all electric by 2030. The ambition now faces improbability after Centre and NITI Aayog, government’s think tank which was tasked with formulating the policy for electric mobility, collectively said at an event that “there was no need of an EV policy now”.

The decision to put the policy formulation on hold comes after the road ministry got apprehensive about the “prices of EVs not going down sharply”.

“Everybody is talking about battery… But they must realise that battery is not something where the cost will come down sharply,” he said.

The official added that the falling price theory for EVs was based on the assumption that volumes increase competitiveness and reduce the cost which, he feels, doesn’t happen in reality.

He also said that, in theory, prices of resources, say petroleum or gold, are bound to rise after a point, when the quantity demanded increases, due to issues related to availability, import restrictions etc.

“Any metal that is extracted from the Earth sees a rise in price on the back of increased quantity demanded. Then, how is lithium any different?” he asked.

“Why should the costs go down, anyway? The assumption of competitiveness and volumes are good for university research papers but not reality. None of the industry has said that too”.

Also read: Policy for electric vehicles likely to follow Transport for London model

Taking example of China, another official said that the country has huge lithium ores yet it doesn’t sell electric vehicles at low costs. There has to be a reason which is “holding up the prices”.

“It will go down initially, no doubt, but then it won’t go down drastically so as to make it overwhelmingly acceptable,” the above mentioned official said adding, “Electric will come. But whether the prices will go down or not, nobody knows”.

Argentina, Australia, Bolivia, Chile, China, Russia and USA are some of the places where Lithium ores can be found in the world.

The road transport ministry has now asked all other related ministries to work out plan through which the electric fleet can comfortably be introduced in India while putting onus on NITI Aayog to compile the recommendations.

“Current status is that all ministries are working on various aspects… NITI Aayog will consolidate them and come up with something,” the official said.

Moneycontrol has reported that NITI Aayog earlier suggested that “Centre should set up National Council for Electric Mobility under the finance minister or someone of similar stature”.

Gadkari also suggested in an interaction with Moneycontrol that adoption of EVs could follow Transport for London model in India.

“Our department has signed an agreement with the transport department of London (Transport for London)… A conference was held with transport ministers and we presented the London model to them. A lot of people are thinking in that direction to adopt the policy using that model,” Gadkari had said.
Nikita Vashisht
first published: Feb 26, 2018 05:18 pm

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