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Electric cars: Can they win any road space in India?

 According to reports, it started life as a two-seater ten years; last week it re-entered public space as a four-seater hatchback. Reva, now re-branded e20, the country’s first electric car, has come up in life. But it still remains to be seen if it can set the ball rolling for electric cars in India.

The launch of e20, developed by Mahindra Reva Electric Vehicles (M&M acquired Reva Electric Car Company three years ago), comes at a time when passenger car sales in the country are the worst hit. High fuel prices and spiralling interest rates have dragged car sales in February to a 12-year low of 14,51,278 units, from  15,34,910 just a year ago.

But M&M believes there’s a latent demand for electric cars and is looking to get the first mover advantage. “We have invested significantly in this project only because there’s a demand. We hope to sell 400 to 500 EVs a month and Delhi will be the biggest market with an anticipated 150 to 200 unit sales every month,” explains Pawan Goenka, president (automotive and farm equipment sectors), M&M, which has invested Rs 100 crore to produce 30,000 units annually of the e20 at its Bangalore facility.

Globally, it is anticipated that by 2020, five per cent or nearly two million cars will be Electric Variants (EVs). In India, less than five per cent of the passenger cars are pegged to be electric by 2017. This would imply a market size of 1,75,000 electric units in an overall passenger market of  3.5 million units. But it seems unlikely.

Auto makers such as Hyundai, Tata Motors, Maruti Suzuki and Hero Electric had earlier announced decisions to debut electric cars. But nothing seems to be happening. Tata Motors, which showcased the Vista EV at the Geneva Motor Show and India Auto Show in 2010, is yet to make it commercially available. Similarly, Maruti Suzuki, which earlier expressed its intent to roll out an EV in association with Suzuki, is yet to firm up plans. “We have the technology in place and have showcased both Chevrolet Spark and Chevrolet Beat Electric vehicles in the Indian market in the past. But we will look at the option of introducing electric vehicles depending upon the availability of the required infrastructure and readiness of the market,” says P Balendran, vice-president, General Motors India.

Japanese auto giant Nissan India echoes similar views. “We have lined up about 10 models to be introduced in India this year. It’s too early to talk about electric cars,” says Takayuki Ishida, MD & CEO, Nissan Motor India Pvt Ltd.

Given the auto makers’ lack of enthusiasm, the Indian government too seems to playing blind. In 2010, the Ministry of New and Renewable Energy had launched a scheme offering incentives of up to 20 per cent on ex-factory prices of EVs. It hasn’t bothered to extend the scheme, which expired on March 31, 2012. M&M says the e20, which is priced upwards of `5.96 lakh in Delhi could be cheaper if the government were to do a rethink.

However, in Delhi, EVs are still entitled to a 15 per cent subsidy on base price, a VAT refund (which is 12.5 per cent) and a 50 per cent cut in road tax. Still, the industry feels this is insufficient.

“To reduce the ownership cost of EVs, full government support in terms of project incentives, project subsidy, tax incentives, VAT refund, exemption from road tax, registration charges and leasing options for batteries are essential,” says GM’s Balendran.

According to industry body Society of Indian Auto Manufacturers (SIAM) vice-president Vikram Kirloskar, who is also vice-chairman of Toyota Kirloskar Motor, an ecosystem has to be in place for EVs to succeed in this country. “Most importantly, the infrastructure in terms of charging stations, availability of power, provision for charging in residential buildings etc are crucial and will determine the success of these models,” he says.

According to a Toyota official, the company is solely focusing on hybrid models, which the company thinks is more promising than EVs.

Meanwhile, sensing a market potential, M&M plans to export its new electric car to Europe in six to nine months besides extending the electric mobility technology to its two-wheelers. It remains to be seen if other players follow suit.

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