RPT–India’s green car plan prioritises electric vehicles over hybrids – Reuters


(Repeats item first published on Sunday with no changes to
text)

* India think-tank draft report suggests shift in green car
policy

* Report aimed at electrifying all vehicles in India by 2032

* Report likely to influence new mobility policy – sources

* Prioritise battery production, charging infrastructure -
report

* Electric vehicle push could disrupt auto sector – govt
source

By Aditi Shah

NEW DELHI, May 8 India’s most influential
government think-tank has recommended lowering taxes and
interest rates for loans on electric vehicles, while capping
sales of conventional cars, signalling a dramatic shift in
policy in one of the world’s fastest growing auto markets.

A draft of the 90-page blueprint, seen by Reuters, also
suggests the government opens a battery plant by the end of 2018
and uses tax revenues from the sale of petrol and diesel
vehicles to set up charging stations for electric vehicles.

The recommendations in a draft report by Niti Aayog, the
planning body headed by Prime Minister Narendra Modi, are aimed
at electrifying all vehicles in the country by 2032 and will
likely shape a new mobility policy, said government and industry
sources.

The report’s focus solely on electric vehicles marks a shift
away from the current policy that incentivises both hybrid
vehicles – which combine fossil fuel and electric power – and
electric cars, and is worrying some automakers.

“India’s potential to create a new mobility paradigm that is
shared, electric and connected could have a significant impact
domestically and globally,” said a draft version of the report,
titled Transformative Mobility Solutions for India, which will
be made public this week.

India’s plan to leapfrog hybrid technology comes after China
announced aggressive measures last year to push sales of plug-in
vehicles including subsidies, research funding and rules
designed to discourage fossil-fuel cars in big cities.

It would also mark a radical response by India as it looks
to cut its oil import bill to half by 2030 and reduce emissions
as part of its commitment to the Paris climate treaty.

Officials acknowledge the blueprint faces challenges. High
battery costs would push up car prices and a lack of charging
stations and other infrastructure means car makers, who have
been consulted on the proposals ahead of publication, would
hesitate to make the necessary investment in the technology.

“If we accelerate electric vehicle growth it will be a
disruption for the auto sector and would require investment, but
if we’re not able to adapt quickly we risk being net importers
of batteries,” said a government source involved in the plans.
“There has been resistance from car makers.”

India’s top-selling carmaker Maruti Suzuki has
invested in so-called mild-hybrid technology, which makes less
use of electric power than full hybrids, while Toyota Motor Corp
sells its luxury hybrid Camry sedan in the country.
Mahindra & Mahindra is the only manufacturer of
electric vehicles in India.

SHIFT IN POLICY

India, in 2015, launched a scheme called Faster Adoption and
Manufacturing of Hybrid and Electric Vehicles under which it
offered incentives for clean fuel technology cars to boost their
sales to up to 7 million vehicles by 2020.

Despite incentives as high as 140,000 rupees ($2,175) on
some cars the scheme has made little progress, with the sales of
electric and hybrid cars making up only a fraction of the 3
million passenger vehicles sold in India in 2016.

The scheme, which expired on March 31, has now been extended
by six months while future policy is worked out, two government
officials said. Lack of clarity on policy risks delaying
investment in the auto sector, one official added.

The new Niti Aayog report, co-produced with U.S. consultancy
Rocky Mountain Institute, outlines a 15-year plan, broken into
three phases starting in 2017.

“Limit registration of conventional vehicles through public
lotteries and complement that with preferential registration for
electric vehicles, similar to that in China,” the report said,
in one of its most radical proposals.

To kick-start the shift, the report suggests bulk
procurement of electric vehicles, building standardised,
swappable batteries for two- and three-wheelers to bring down
their cost and having favourable tariff structures for charging
cars.

“Prioritise battery and charging infrastructure
development,” the report states, while setting a 2018 goal for
setting up a 250 megawatt per hour battery plant with an aim to
reach one gigawatt of production by 2020.

It also recommends setting up battery swapping stations by
2018, common manufacturing facilities for components and
increasing subsidies on all battery electric vehicles to bring
them to cost parity with conventional models by 2025.

Other suggestions in the blueprint include incentivising the
use of electric cars as taxis by lowering taxes, interest rates
on loans for purchases and electricity tariffs for fleet
operators, and lowering duties on makers of such fleet cars.

Puneet Gupta, South Asia manager at consultant IHS Markit,
said the government would need to lead the change with generous
incentives to achieve its goal.

“This is one of the most radical changes the government is
talking about,” said Gupta. “All cars being electric is a
distant dream.”
(Reporting by Aditi Shah; Editing by Euan Rocha and Alex
Richardson)

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