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No incentive, no new launch of electric vehicles: Mahindra

According to reports, Mahindra and Mahindra Ltd has decided against introducing more electric vehicles in India, and instead focus on exports, if the government does not keep its commitment to provide incentives for such vehicles.

“While there have been several announcements, nothing has happened so far,” Pawan Goenka, executive director and president, automotive and farm equipment sectors, Mahindra and Mahindra, told reporters on Thursday.

Mahindra, after acquiring Reva Electric Car Co. Ltd in 2010, launched its debut electric car, E2O, in March. Priced at Rs.5.59 lakh (ex-showroom, Delhi), the car has seen a tepid response, selling only 300 units since its launch, way below the company’s expectation of 500 units a month.

Mahindra is developing new variants of the E2O, as well as electric versions of its sedan Verito and light commercial vehicles Maxximo and Gio.These models will be ready by March, Goenka said.

Their commercial launches, however, will depend on government incentives, he said, adding Mahindra will not launch any new models in the

Indian market in the absence of incentives. “We would rather look at exports,” he said.

Mahindra Reva Electric Car Co. is the only manufacturer of electric cars in the country, while some smaller firms make electric two-wheelers.Mahindra sells the E2O in Sri Lanka and Bangladesh and is developing a model for Europe, where government incentives drive the market for electric vehicles. Denmark, Norway and the UK are “priority markets”, Goenka said, adding that this model for Europe will be ready by June.

The government set an ambitious target of having 7 million electric vehicles on Indian roads by 2020 as part of its national electric mobility mission plan, announced in the February 2011 budget. It was formally unveiled by Prime Minister Manmohan Singh in January this year. But the final contours of the scheme are still awaited as the government is yet to firm up the policy.

To reduce dependence on fossil fuels, India plans to spend at least Rs.22,500 crore in the next eight years to promote electric and hybrid vehicles. Of this, the government will provide Rs.13,000-14,000 crore, and the auto industry will invest the balance sum in research and development, according to the scheme.

Also, as part of a subsidy scheme announced in November 2010, the government was to set up a Rs.95 crore corpus to provide incentives of as much as 20% on the ex-factory prices of electric vehicles. This was to be subject to a maximum limit of Rs.4,000 for low-speed electric two-wheelers, Rs.5,000 for high-speed electric two-wheelers and Rs.1 lakh for electric cars.

Under the scheme, manufacturers would pass on the benefits to their customers and claim a refund from the government, Mint reported on 19 March. The plan has remained on paper.

Sohinder Singh Gill, president of the Society of Manufacturers of Electric Vehicles, a lobby group, said manufacturers invested in electric vehicles on the assumption they would get refunds from the government. But as the ministry of renewable energy failed to tie up funds for the corpus, they didn’t get any refunds.

“It’s been three years and we are still waiting. They shouldn’t have announced the scheme in the first place if they had no funds,” Gill said, adding neither did the subsidy scheme take off nor have things started moving at a reasonable pace on the mobility mission.

The gap of two years since the announcement was made has disturbed the cost dynamics of firms, he said. Singh’s firm Hero Electric also has put on hold its plans to launch electric two-wheelers in India till the government announces an incentive policy and is looking at overseas markets for sales.

These manufacturers are now putting together a draft on electric vehicles to submit to the ministry of heavy industry before the end of the year. “We expect the process of approvals to start from thereon,” Singh said.

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