Electric Vehicle market to touch five million units by 2020: Study

Demand for electric and hybrid vehicles in India, the world’s second fastest growing automobile market, is estimated to increase 50-fold to 5 million units by 2020, according to two people involved in a study funded by the government.

“We have found that while in other countries people pay a small premium to buy an electric vehicle, in India people’s desire to buy an electric vehicle revolves around the cost of ownership,” said one of the official involved in the study, who declined to be named.

Around 100,000 electric vehicles were sold in the country in 2009-10, according to the latest numbers available with the Society of Manufacturers of Electric Vehicles.

The survey was conducted by Booz & Allen and Society of Indian Automobile Manufacturers to determine the demand for electric and hybrid vehicles in the nation. It was funded by the department of heavy industries, a government official said, requesting anonymity.

The study is a part of a national plan to develop electric and hybrid vehicles that was proposed in the Union budget for the current fiscal. The study suggests collaboration between the government and industry on research and development to build fuel-efficient vehicles. The government will, however, be solely responsible for creating infrastructure for the development of the market for electric vehicles such as charging stations.

The survey was done across 16 cities and with 7,000 respondents to check demand for such vehicles, the government official said.

The study expects demand for electric two-wheelers and buses to rise sharply. “A major chunk of these five million vehicles would come from motorcycles and buses. We have also found that consumers are very sceptical about battery operation. So, the government will have to do the needful as far as the infrastructure is concerned,” said the first person cited in the report.

The study proposes that the government provide incentives to companies to develop the technology locally and help the industry with proper policy, while the industry will have to put in the investments to make this project a success.

The study will be released by heavy industries minister Praful Patel on Wednesday and will be submitted to a minister-level national council for electric vehicles for a review.

The government’s national mission plan for electric and hybrid vehicles aims to promote their use and cut dependence on fossil fuels.

Under the plan, the government has set up a minister-level national council for electric vehicles, headed by Patel, and a secretary-level board to ensure uniformity of regulations across all states.

The policy is aimed at removing hurdles such as the need to obtain the consent of all concerned ministries for various measures. Setting up a charging station, for instance, requires the approval of the roads and power ministries among others.

“The idea is to have a strong political will to implement a uniform tax structure and infrastructure plans across the country,” said the government official cited above. “We want to see at least eight lakh electric vehicles on Indian roads by 2015. We will introduce it as a pilot project in some of the major cities.”

In November, the ministry of new and renewable energy offered incentives to electric vehicle makers in the current and the next fiscal years to boost sales of the vehicles.

Delhi provides the best incentive with a rebate on value added tax amounting to a 29.5% reduction in price.

The ex-factory price of electric two-wheelers ranges from Rs.26,000 to Rs.43,000, while electric cars made by Mahindra Reva Electric Vehicles Pvt. Ltd,  India’s only maker of such vehicles, start at Rs.3.5 lakh.