By Priya Kumari
The transportation industry is set to witness a massive expansion in electric and hybrid vehicles. In India, the government think tank, NITI Aayog, has recommended setting up a consortium of manufacturers for making batteries and supporting technological research for electric vehicles.
An informal inter-ministerial panel has also suggested levying a surcharge on petrol and diesel vehicles and setting up free charging facilities for the first three years, as stated in a draft policy report. The government is working on a policy for electric vehicles to be announced by the end of 2017.
The need to incentivise alternative energy
Launching and promoting adoption of electric vehicles holds importance in emerging economies like China and India. According to a report by the International Energy Agency (IEA), transportation contributes to nearly 23% of the global greenhouse emissions. Electric vehicles (EVs) are a cleaner alternative to vehicles running on petroleum-fuelled internal combustion engines (ICEs). They are driven by electric motors powered by a pack of rechargeable batteries.
EVs are an attempt to bring down the crude oil imports and create a hedge against the uncertainty prevailing in global oil markets. With the standards of living improving, the demand for personal car ownership is increasing. This creates a stress on the existing base of conventional fuels.
Despite this urgent need, there are certain bottlenecks which are preventing the adoption of electric vehicles. Greater upfront cost owing to highly priced heavy batteries and longer charging times are a cause of concern. Moreover, batteries comprise nearly a third of the cost of electric vehicles. To incentivise the adoption of electric vehicles, the government can reduce duties on such cars and minimise registration charges for public transportation fleets.
India and China up their game
Adoption of electric cars is likely to hit the demand for petroleum and gasoline as fuels. EVs are being seriously considered by India and China to cut oil import bills and increase self-sufficiency in transportation. In the policy roadmap released by China recently, it highlighted its ambition of making electric vehicles account for nearly a fifth of its total annual vehicle sales by 2025.
Similarly, in its bid to boost alternative means of road transportation, the government of India launched the Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme in April 2015. Planned to be implemented in phases, the scheme aims to improve technological infrastructure, boost demand, launch pilot projects and enhance charging infrastructure. Till February 2017, the government proposed expenditure worth Rs 127.77 crore for buying over 1.11 lakh electric and hybrid vehicles. Besides giving a push to the manufacturing industry, the scheme is likely to create around 3,00,000 jobs by 2020.
Replacing oil with electric
After increased shale production by the U.S and persistent supply from the OPEC region, the global oil prices experienced a sharp downfall due to excess supply. These phenomena contribute to the continuity of fuel-based vehicles. In order to bring down the maintenance cost of electric vehicles, there needs to be a gradual reducing of the price of renewable sources like wind and solar energy. This will aid in reducing the demand for oil by the transportation sector.
Despite the strongholds of the oil industry in the wake of scientific progress, many oil giants have begun taking notes of the crucial developments in the alternative vehicles space. These are being manifested in the form of proposals to create charging points at retail sites and shifting production to petrochemicals.
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