Union Transport Minister Nitin Gadkari, in a recent media event, made a statement that he expected electric car prices to match those of petrol and diesel cars in the next 2 years. Mr. Gadkari essentially is saying that a car like the Tata Nexon Electric, which is priced at Rs. 13.99 lakh, will be priced at around Rs. 7 lakh (which is the price of a Tata Nexon Petrol). For this to happen, the prices of electric cars need to reduce by nearly 50 %. Here is why the minister thinks that electric car prices will match those of petrol/diesel cars.
Mr. Gadkari’s comments on this matter are as follows:
We have made a success of the BS VI story. My thanks to all of industry for your efforts and cooperation. We must understand that the country is struggling with the huge problem of importing up to Rs 800,000 crore (US$ 108 billion) of crude oil every year, which is pushing us back economically. That aside, rising pollution is an even bigger concern with States such as New Delhi seen grappling with it. At present, we are making up to 81 percent of the entire composition of the lithium-ion battery locally in India, and I am confident that within two years, we will be able to take it to 100 percent.
I personally anticipate the prices of electric two-wheelers and four-wheelers coming down to the level of their conventional petrol counterparts in the next two years, while electric buses will retail at prices equalling their diesel-powered models. I know there are some problems, but the way in which the industry is working makes me extremely confident about achieving this. There is tremendous work going on in areas such as metal-ion and metal-air battery technologies, which are set to enable this target. My suggestion is that we must switch to import-substituting, cost-effective, pollution free and indigenous propulsion options.
Clearly, this is the boldest comment from a government head, telling vehicle buyers that electric vehicles will soon get much cheaper. The minister seems to be betting on indigenously developed lithium ion battery technology, which is expected to cost a lot lower than the imported ones. The main reason for electric cars being costlier than petrol/diesel powered cars is due to the steep cost of the battery. If the cost of the battery comes down to say 20-25 % of the current levels thanks to indigenization, there is a good possibility of electric vehicle prices matching that of petrol/diesel powered ones.
The Indian government for its part is already encouraging electric vehicles by offering attractive subsidies on them. The government is also working on improving charging infrastructure across the country. However, electric vehicle charging points continue to be few and far in between, and they’re still a long way from matching petrol and diesel refueling outlets. If Mr. Gadkari’s prediction indeed comes true, India’s energy import bill will be greatly reduced, and this money can be channeled towards other developmental goals of the government.