How realistic are India’s 2030 fleet electrification targets?
By 2030, the government intends to have an electric vehicle (EV) sales penetration of 30 per cent for private cars, 70 per cent for commercial vehicles and 80 per cent for two and three-wheelers, Nitin Gadkari, Minister of Road Transport and Highways (MoRTH), stated in 2021.
Improvements in vehicle finance and mobilisation of public and private capital could have at least 50 million EVs plying on India’s roads by 2030, according to Rocky Mountain Institute, an organisation that collaborated with government think tank Niti Aayog in releasing Mobilising Electric Vehicle Financing in India report in 2021.
However, an independent analysis by the clean air and sustainable mobility team at the Centre for Science and Environment, a Delhi-based non-profit, revealed that there will be annual EV sales of 2.05 million in 2030.
This analysis is based on the total vehicle and EV sales trends observed since 2012. The International Energy Agency also estimates annual EV sales of 1.9 million in India by 2030.
The Centre’s Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) is a scheme based on demand-side subsidy. With this, the government can only support and influence a buyer’s purchase decision.
A graph showing global EV sales by scenario, 2020-2030. Yellow depicts India’s share in EV sales. Source: International Energy Agency
It is difficult to connect the dots between the government’s target for 30 per cent private fleet electrification by 2030 and a solitary buyer’s decision, mostly driven by cost and convenience.
Gadkari’s ambitious mandate can only be achieved if the government issues fleet electrification targets to the supply side of the Indian EV industry, i.e. original equipment manufacturers.
The total vehicle sales in the country saw a dip in 2020, which continued into the next financial year, 2021, according to data from MoRTH’s VAHAN portal. Although this decline could be attributed to the COVID-19 pandemic, it is noteworthy that the annual vehicle sales have not yet caught up to the pre-pandemic levels. This means that there has been a dent in the overall economic setup.
First, sales of EVs depend on the disposable income of the buyers. So, the fall in positive purchase decisions could be attributed to reduced income due to unemployment and an overall decline in market sentiments.
Second, a marked increase in vehicle purchases can be observed only with more parking and driving space in the existing cities or with newer cities coming up by 2030 with thriving road infrastructure.
Considering India’s rising oil bills, the transition to clean energy also offers a huge economic opportunity for the country.
But, it is imperative to note that the government’s macro-economic decisions should not ignore the micro-economic identity of the country.
It must be remembered that the larger goal is 100 per cent fleet electrification and not just increased EV sales. That is, the focus should be on converting the existing fleet to EVs and not just adding more EVs to the roads, which will only lead to more vehicular congestion in the cities and break the back of the common man in non-utilitarian spending on new vehicle purchases.