Regulatory measures will play a key role in driving the adoption of EVs among businesses and commercial fleet operators
Mobility is an industry that is primed for a transformation. Over the next two decades, EV sales are slated to catapult from under 3 per cent of all vehicle sales in 2020 to close to 60 per cent in 2040. With environmental sustainability and emissions reductions rapidly becoming key priorities for governments and industry alike, the transition to e-mobility has been increasingly supported by policy measures, incentives and regulation.
For India, delayed adoption of EVs would imply not only tens of millions of additional combustion vehicles on Indian roads, but also massive disadvantages in manufacturing. A new report, published by WBCSD today, lays out a host of policy recommendations to facilitate faster adoption of EVs, particularly among Indian businesses. “India urgently needs a holistic policy approach that addresses the established automotive sector’s concerns, creates market rules to build the new energy infrastructure, preserves and creates jobs, and fosters demand to accelerate technology adoption in order to fully capture the available economic opportunity,” states the report.
A national target to direct ambition
As a priority, the report recommends committing to a national target for EV adoption which it claims will serve in galvanising investment and business action specific to accelerated deployment of, particularly in the shared mobility space. The report further adds that recommendations made by the Society of Indian Automobile Manufacturers (SIAM) in 2017, i.e. electrification of 40% of new sales in the 2W, 3W and car vehicle segments and 100% of public intracity vehicles by 2030, could serve as a good starting point.
According to the report, any acceleration in EV adoption will have to go hand-in-hand with India’s ICE vehicle scrappage policies. While India is currently finalising a new vehicle scrappage policy, WBCSD has proposed the extension of subsidies and incentives for fleet operators to replace old ICE fleets with EVs.
Policy recommendations in the report also include the establishment of low emission zones, encouragement of leasing-based business models, and extension of subsidies, exemptions and incentives for businesses operating EV fleets.
Fixing the charging network
Range anxiety, or the concern regarding adequate on-road charging capacity, has long been identified as among the biggest barriers for EV adoption in India. While the deployment of charging infrastructure has recently seen a surge of support from public and private quarters, the sector remains in its infancy and long path to creating a robust network lies ahead.
According to the WBCSD report, a key issue related to charging infrastructure is the lack of market rules around setting out responsibilities of various stake holders with regards to payments towards the required grid upgradation. The report goes on to recommend that this grid upgradation capital cost be socialized in the short term and recovered through profitable sale of power in the longer term. The recommendations in WBCSD’s report further include that the Ministry of Power consider increasing the threshold of LT connections for EV charging to 200 kW across states, which will reduce operating costs for fleet operators.
Given the dominance of 2-wheelers and 3-wheelers in India’s EV market, the report also suggests that the government take an agnostic stance towards charging technologies. “India can lead the global market in battery swapping technology; wide-scale adoption could also make India an exporter of technology and expertise. Battery swapping can enable adoption of electric 2W and 3W across use cases such as deliveries, ride-hailing, bike/scooter rentals and others,” it states. But for this, India will need to consider bringing battery swapping under the national FAME subsidy scheme. The report goes on to suggest a reduction in GST applicable on EV charging equipment from the current 18% to 5%, in line with EVs and other EV supply equipment (EVSEs). This, according to the report, shall bring in consistency to fiscal measures promoting EV adoption in the country and increase affordability.
The emission cuts objective
Perhaps the most important factor in the global push for EV adoption is the relative reduction in carbon emissions over their lifetimes. These reductions are estimated to be about 22% and 28% when compared to petrol and diesel cars even when the EVs are powered by coal-dominated grids. This reduction however shoots up drastically to close to 80% when the grid is dominated by renewable sources of energy. This massive differential offers a golden opportunity to connect the dots between the energy and mobility low carbon transitions. According to the report, restrictive policies currently buck this potential for transport emission reductions due to poor access to renewable power. At current levels of scattered demand, thresholds of 1 MW for open access connections for charging stations have proven to be a deterrent. While due to its high capital requirements, on site solar installations have yet to catch on as a popular option.
According to the report’s recommendations, India must consider regulatory easing to facilitate greater access to renewable energy to power charging stations. This, the report states can be done through- (i) the State Electricity Regulatory Commissions (SERCs) working with DISCOMs to allow virtual demand aggregation of smaller charging stations to avail RE through open access and/or (ii) SERCs and the Central Electricity Regulatory Commission (CERC) developing regulatory mechanisms that allow bringing down the open access threshold below 1 MW so that stand-alone stations or virtually aggregated networks can achieve the threshold and avail RE. The report states that these will ensure a double-objective of reducing costs while also cutting emissions.