Why Indian government has taken a U-Turn on electric vehicles?

Is the Indian government going slow on electric vehicles? If yes, why?

After all the noise surrounding the electric cars in India and its 2030 deadline, the government seems to have gone has gone cold on it. India’s aim to make the country an electric-vehicle only nation by 2030 created headlines around the world. However, the transport minister recently said that there was no need of framing a policy for electric cars. The question is, is this a U-turn or not – many seem to think it is.

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Moneycontrol reports that the government’s U-turn on bringing a separate policy on electric cars could be based on the high price of the vehicles. The government still feels that the segment is quite “uncertain”. Sources have said that the road ministry is cautious with the adoption of EVs as there are many things that need to be ironed out.

An unnamed government official told Moneycontrol,

“Electric vehicles won’t be adopted (by people) unless the cost goes down or unless we have charging infrastructure… Simply, any question about EVs’ acceptance will be faced by a no. See, the truth is, even if we say that we want EVs by 2025 or 2030… where are the resources to make it happen?” the official said, adding, “Should government really get into a sector which is uncertain? That is the point”

The Indian government went big on the electric vehicles last year. With a 2030 deadline, many manufacturers showed concern and many wanted a clearer picture with a policy on the cars. NITI Aayog and Centre were to formulate the new policy but in a recent event, they said that “there is no need for an EV policy now.” This was a huge surprise.

One of the biggest reasons behind this is the battery price. India is a price sensitive market and lithium ion batteries are not cheap. Even aggressive competition among the manufacturers will not bring down the prices. It seems the government was operating under the assumption that large scale production and competition would bring down the prices of electric vehicles. But it seems a belated realisation has dawned – that battery prices are a constant, and competition cannot reduce their prices much. If the official who talked to MoneyControl is right, then this is hugely embarrassing – that the government, and the minister in charge, went ahead and told the industry to change everything they do without doing basic research on how the EV market works. It also means that the government is possibly unwilling to offer EV incentives – massive subsidies, without which the sector may not take off.

The Road transport ministry has given the task to all the related ministries to work on a plan to introduce electric cars in India while NITI Aayog will compile the recommendations. This may take a while.

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