Current EV Subsidies Aren’t Enough, India’s EV Future Hinges On Infra: AdvantEdge’s Khattar

Current EV Subsidies Aren’t Enough, India’s EV Future Hinges On Infra: AdvantEdge’s Khattar

SUMMARY

While it’s debatable if it was the government's ambiguity while issuing subsidies or the EV makers' failure to comply with the localisation norms, the country’s EV industry needs to come out of the subsidy turmoil at the earliest

With FAME-III yet to be announced and industry leaders already standing divided on the need for subsidies, it is vital to note that demand subsidies have played a crucial role in giving a boost to the country’s EV adoption journey

As a fund, we have always believed that as EV adoption happens at a mass scale, the transition from ICE to EV will happen faster in B2B or commercial areas than personal mobility, said Kunal Khattar

In the last one year, the EV sector in India has faced significant challenges on the subsidy front. The reduction in subsidies has hurt many electric two-wheeler companies and slowed down the overall EV adoption in the country.Not to mention, Khattar helped us decode the current challenges, complexities, and opportunities for the Indian EV industry. Notably, the industry leader believes that 100% EV adoption is inevitable because of the rising costs of internal combustion engine (ICE) vehicles and the deflationary nature of EVs. However, when I speak to the likes of Uber, Ola, Amazon or Flipkart, they say that they want to be 100% electric. But the issue is that there is no solid energy solution. The vehicles available are either low-speed food deliveries or too high-end. And then there is the challenge of high financing and insurance costs.The biggest gap right now is in heavy-duty commercial EVs for long distances. There is a need for strong energy distribution facilities on national highways, which will first be set up to cater to the needs of buses. Once they are set up, you’ll start seeing etrucks joining the fray.For comparison, China has invested $230 Bn in its EV sector to date. I understand that we have a limited budget, but we also aspire to become world leaders in EVs.It should encourage people to set up cell manufacturing plants through PLI, attract more global OEMs, encourage joint ventures, and support large-scale manufacturing funds for critical components like motors and controllers. Subsidies for land and energy will also help.Further, semiconductors for electric mobility hasn’t been our main focus area. However, we are more interested in exploring how AI is going to impact electrification. 

While it’s debatable if it was the government’s ambiguity while issuing subsidies or the EV makers’ failure to comply with the localisation norms, the country needs to come out of this turmoil at the earliest to lead the global EV revolution.

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