Energetica India - June 2020

ELECTRIC VEHICLE Targeted at bridging the gaps identified above,the central gov - ernment has shown strong commitmenttowards EVs over the last few years. According to Ministry of Heavy Industries and Public Enterprises, FAME-1 provided incentives worth INR343 crore and supported sales of 2.78 lakh EVs over a period of four years (2015 to 2019). Also, the total budgetary allocation for FAME-II(2019-2022) has beenincreased to INR10,000 crore. The subsidy eligibility criteriahave also been made stringent by specifying minimum vehicle performanceparameters and localisation content. This is expected to improve the quality of EVsavailablein the market along with creating the much-needed domestic supply chain for EVs. Efforts are ongoing to create the required battery ecosystem and finalise the investment plan for domestic cell manufacturing. Several state governments have drafted EV policiesto promote EV usage and are inducting EVs into their public bus transport fleet. Learnings from global policy scenario The policy environment has been a key driver in the adoption of EVsacross the globe. China’s journey towards becoming the world’s largest EV market has been driven by financial and non-financial incentives - both at central and regional levels, along with a thrust towards development of required infrastruc- ture for charging and battery manufacturing. Similar steps have been taken by several European countries such asNorway, the U.K. and the Netherlands to create demand, ensure supply, set up infrastructure and promote domestic manufacturing. While these incentives can kick-start adoption, the sustenance of EVs is only possible if customers are offered a compelling value proposition in the form of product quality, cost and user experience. A holistic view of the entire EV ecosystem and stakeholders needs to be taken while developing the regulatory agenda. Some of the key intervention areas for accelerating EV adoption are as follows. Source: KPMG in India Analysis Potential impact of COVID-19 Auto sales across vehicle segments have seen a slowdown over the last year and, to add to that, COVID-19 has hit the industry adversely,pushing back recovery by a few quarters. OEMs have made huge investments to make their vehicles BS-VI compliant and are likely to delaytheir EV plans by a few quarters. The gov- ernment may also find it hard to fund the subsidies proposed under FAME-2. While all these factors might causedelays, the EV story in India cannot be denied. With a growing market, OEMs introducing new EV models, creation of charging infrastructure, develop- ment of local manufacturing capability and a supportive policy framework providing the initial boost to encourage growth of the industry, we expect demand to pick up over the next few years and a bright future for the EV industry. 36 energetica INDIA- June_2020