EV sales expected to double after govt push

The announcement of Rs 23,000 crore National Electricity Mobility Plan, to push sale of electrical vehicles by the central government, will bring much needed respite to manufacturers who have seen sales plummet by 75% since April when cash incentive to end-users (buyers of electric or hybrid vehicle) expired.

As part of the plan, the government wants to reduce dependence on expensive fossil fuels and push through sale of five to seven million electricity-operated vehicles by 2020.

The plan has components like cash subsidy and financing facilities for the end consumers, creating a network for charging of the vehicles, research and development as well as (R&D) incentives for the companies.

"Close to 70% sale of petrol bikes are through loans. In case of electric vehicles, it is zero. After this plan, banks and financial institutions will offer loans towards purchase of e-vehicles. We expect the sale of electric bikes to double in one year," said Sohinder Gill, director of the Society of Manufacturers of Electric Vehicles(SMEV).

SMEV claims that sales of electric bikes has dropped by 75% in current fiscal as the subsidy scheme for the consumers expired on March 31, 2012. "Our sale dropped by 50% this fiscal. Now we expect them to rise and thereby lead to better utilisation of our capacities," said Avinash Bhandari, joint MD of Electrotherm, which produces Yo-bykes.

The company which has installed capacity of 2.88 lakh manufacturing capacity at its Gandhidham plant, has seen its sales halving in current fiscal from close to 80,000 units in 2011-12.

According to Bhandari, the recent announcement will encourage existing and aspiring manufacturers to go for expansion as sales pick up. Established companies, that are yet to enter the space in India, will also look at setting up shop as the latest plan provides incentives on demand as well as supply side, he added.

Governments world over subsidise e-vehicles as part of their promotion plan. The US government gives a subsidy of $7,500 per vehicle. China gives a subsidy of $8,000 and in European countriesthe subsidy is 3,000 euros.

Till March 31, 2012, the Indian government offered subsidy of 20% or Rs 1 lakh, whichever is lower, on e-car whereas in case of a two-wheeler, the subsidy was limited to Rs 4,000.

The subsidy regime under the new plan by the Centre will be announced soon. Indian manufacturers are also drawing up expansion plans. Mahindra Reva, the manufacturer of India's first electric car Reva, recently inaugurated a plant at Bengaluru with initial capacity of 6,000 units to be raised to 30,000 in a phased manner.

R Chandramouli, COO, Mahindra Reva feels that the measures approved will facilitate creation of an ecosystem to promote electric and hybrid vehicles in the country. "Steps should be taken to convert these announcements into real benefits for the consumers. This will increase the demand for these vehicles," he told ET.