Analysis: How the Gujarat EV policy benefits the consumer

Gujarat's EV policy, which will be available till the July 1, 2025, has been created with an aim to cut “600,000 tons of carbon emissions and Rs 5 crore worth of fuel cost (image: Shutterstock)

“Gujarat might just go from having the most expensive EVs in the country to the cheapest in one policy change today,” tweeted Ather co-founder and CEO Tarun Mehta on June 22. A few hours later, with Gujarat’s EV policy laid-out, the tweet seemed less cryptic and more matter-of-fact.

Gujarat has emerged as the fourth state to offer heavy incentives for customers looking to switch to EVs. The move has been widely lauded by EV manufacturers who will find an incentivised consumer waiting at showroom doors.

What’s the policy all about?

According to the policy, the state government, headed by Gujarat Chief Minister Vijay Rupani, will provide subsidies to buyers of electric two, three and four-wheelers.

The policy, which will be available till the July 1, 2025, has been created with an aim to cut “600,000 tons of carbon emissions and Rs 5 crore worth of fuel cost” according to Rupani.

The plan aims to add 250 charging stations to Gujarat’s existing network of 278 charging stations, with petrol pumps, housing colonies and commercial complexes slated to be given approval for setting-up charging stations.

Who benefits from it?

In short, those purchasing the EVs, for both private and commercial purposes along with those contracted to set-up charging stations. However, not all EVs have benefitted from the new policy, particularly those that fall in the high-end price bracket (anything above Rs 15 lakh, for four-wheelers)

The Gujarat Government is offering a waiver of Rs 10,000 per kWh of battery capacity with total subsidy capped at Rs 20,000 for electric scooters. While brands haven’t revealed the post-subsidy prices, any scooter featuring a lithium-ion battery of 1.5 to 2.0 kWh is likely to see a price drop by Rs 15,000-20,000 (not exceeding the Rs 20,000, regardless of the kWh capacity of the battery).

The other caveat for electric two wheelers is that if their price exceeds Rs 1.5 lakh (ex-showroom) they are automatically ineligible for the subsidy. The price of the Ather 450X, currently belonging to the more expensive crop of electric scooters (costing Rs 1.5 lakh) is set to drop by Rs 20,000.

In order to avail this subsidy, the consumer must get the purchase document authenticated by the government, following which the subsidized amount will be transferred to the buyer’s bank account. The registration fee for the two, three or four-wheeled EV will also be waived off.

For four wheelers such as the Tata Nexon, which uses a 30.2 kWh battery, this means availing a subsidy capped at Rs 1.5 lakh. EVs like the MG ZS aren’t eligible, because the subsidy plan is limited to cars costing up to Rs 15 lakh (ex-showroom). Not just the MG ZS EV but potential customers of EVs like the Hyundai Kona, Mercedes-Benz EQC and the newly launched Jaguar I-Pace will also be unable to receive any subsidy.

For consumers of high-end EVs in Gujarat, things remain status quo. If anyone is to truly benefit, it’s e-commerce and restaurant delivery services (three-wheelers can avail a maximum subsidy of Rs 50,000) along with electric two-wheeler buyers, the bulk of which, thus far, have confined themselves to “low-speed” two-wheelers powered by lead-acid batteries (which formed 90 percent of e2W sales in FY2020).

It’s evident that driving EV car sales isn’t an imperative for the government yet, given that the subsidy target for the next four years is for a sum total of 200000 EVs, only 20,000 of which are four wheelers. The rest is applicable to 110000 e-two-wheelers and 70,000 e-three-wheelers. The country-wide sales figure of EVs in FY2020-21 totalled up to 2,36,802. Out of this 1,52,000 of which were electric two wheelers, 90 percent of which belonged to the low-speed category, max speed of 25kph. Given these figures, the four-year period detailed-out by the Gujarat government appears sufficient for such a scheme to play out. But the direct beneficiaries remain electric two and three-wheeler manufacturers and buyers. Owners of high-end EVs benefit indirectly with a wider charging network, and zero registration fee at any RTO in Gujarat.

For those development charging stations, a capital incentive of Rs 10 lakh or 25 per cent capital subsidy of the project cost. At least the first 250 commercial public EV charging stations will be.

What does the EV industry have to say?

Not surprisingly, EV manufacturers seem quite chuffed with the new developments. At least the ones whose products benefit from the move. Shailesh Chandra, the president of Tata Motors’ Passenger Vehicle Business unit said, “We welcome the move by the Gujarat Government, offering incentive support for all categories of electric vehicles. This clearly signals a strong resolve of the government towards a cleaner environment and a sustainable future for the country”.

Tata Motors is, at present, the only four-wheeled EV maker to directly benefit from the scheme. A spokesperson from Revolt Motors, seemed equally jubilant, “We have already received an overwhelming response from our consumers as we had reopened bookings for our electric motorcycles last week and the introduction of such policies by various states will further boost the adoption of EVs in the country”. The Revolt RV400 could be priced under Rs 90000 in the near future.

Gujarat has emerged as the fourth state to offer heavy incentives for customers looking to switch to EVs.

Are more states likely to do the same?

Gujarat joins Delhi, Maharashtra, Kerala and Bihar in the list of states that have offered subsidies. However, at Rs 10,000 per kWh, the subsidy offered is the highest for any state. While it’s unclear if any other states are likely to top this figure. Several other states are yet to reach the lofty targets they’ve set for themselves. Andhra Pradesh aims to establish one lakh fast charging stations by 2024 and reimburse EV owners of registration and road tax fees by the same year. Himachal Pradesh, aims for a 100 percent transition to EVs, but by 2030. Karnataka, aims to achieve 100 percent e-mobility in auto-rickshaws, cab aggregators, corporate fleets, and school buses by 2030.