We’re in November, and in a couple of months, we’ll be in 2023. And 2023 is the year that electric vehicles will be as affordable as petrol vehicles, according to Union Transport Minister Nitin Gadkari. These statements were made by the minister at a recently held awards ceremony on the 1st of November, 2022. Not so long ago, Mr. Gadkari made a similar claim.
In June of this year, he said that electric vehicles will become as affordable as petrol vehicles within a year. Here’s his statement from back then,
I am trying…within one year, the cost of electric vehicles will be equivalent to the cost of petrol vehicles in the country and we will save money spent on fossil fuels.
Is there any basis to Mr. Gadkari’s statement?
Partly yes. Let us explain. It’s true that electric vehicles are getting more affordable than ever before. Let’s look at the latest electric car to be launched in India – the Tata Tiago EV. With a starting price of Rs. 8.49 lakh, the Tata Tiago EV is the most affordable electric car to be sold in India, and in fact the world when it comes to similarly sized cars. While it’s indisputable that the Tiago EV has made electric cars very affordable for a large majority of buyers in India, it’s still significantly pricier than its petrol engined sibling.
Since electric cars are automatics, let’s compare the price of the Tiago EV with that of the Tiago Petrol AMT to bring this point out more forcefully. The Tiago EV starts at Rs. 8.49 lakh, and the on-road price is about Rs. 9 lakh including insurance. In comparison, the Tiago Petrol XTA AMT trim is priced at Rs. 7.61 lakh, which is about Rs. 1.5 lakh cheaper than the comparable electric trim of the car.
While the petrol powered car can be used both on city streets and on long distance highway journeys (Tiago Petrol AMT can do about 500 kilometers on one tank of fuel), the electric variant (Tiago EV can do about 150-200 Kms per charge) is severely hampered on longer distances as charging infrastructure is woefully inadequate in India. However, the cost of running an electric car is much lower than that of a petrol car.
While the government and various private enterprises are ramping up charging infrastructure, it’ll still be a while before electric cars can truly replace petrol cars. So, Mr. Gadkari may be partly right when it comes to affordability, cars like the Tiago EV make sense only as city runabouts as of now. So, for someone who’s buying an electric car exclusively for city commutes, the Tiago EV is just as affordable as a petrol car after all the savings in fuel costs. The key is to drive the car for over 100 kilometers on an everyday basis to reap the benefit of lower running costs.
Will electric cars get cheaper going forward?
They may, if battery costs fall. Mr. Gadkari, in the past, has noted that there’s a lot of work going on in India with regard to more affordable battery technology. Here’s what he said back then,
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.