Little headway on EV rollout deadline as govt, auto makers stick to guns

Industry says deadline could impact a sector already facing a slowdown and dealing with BS-VI compliance; govt warns of court action

Late last month, a meeting between established auto makers and newer players in the electric vehicle segment continued well past the fixed time.

Participants said that the closed-door meeting, called to find a way out to meet the 2022 deadline for conversion of three-wheelers into electric vehicles and the 2025 deadline for two-wheelers was stormy, to put it mildly.

Even after the discussions got over, a top official from NITI Aayog who had been putting forward the government line on the subject was closeted with a senior auto industry player for almost 40 minutes just to drive home his point.

The argument was simple -- it would be extremely difficult for the government to postpone the rollout deadline indefinitely.

“Either you act fast or the Court steps in, because there are clutch of petitions filed in favour of EVs as a reliable solution to check air pollution in cities, which is growing by the day,” the official is learnt to have told the industry representative.

In days to come, there are indications that the government will only harden its stand and could even look at banning registrations of non-EV two-wheelers from 2025.

It might even consider an imposing some sort of a charge on vehicles using internal combustion engines, based on the ‘polluter pays' principle.

“If big industry players aren’t able to convert their production in six years then God knows when can they do it,” the official commented.

Kapil  Shelke, CEO and Founder, Tork Motors, said, “We are excited to create a conducive ecosystem for EV’s in India. With the positive outlook for EVs in the recently concluded budget, we are happy to support the government at all stages and in all ways possible to make EVs mainstream by 2023.”

The two contrarian views

Sources said two distinct views emerged in the NITI Aayog meeting.

While the emerging players and start­ups in the EV space such as Torque, Revolt, Ather, Kinetic Green and Smart­e wanted the deadline for the two­wheeler rollout to be advanced from 2025 to 2023 or earlier, established players such as TVS, Bajaj and Hero Honda wanted a more “business as usual” approach and said the rollout should not be made mandatory.

The start­ups said unless India developed size and scale in EVs, it would miss the worldwide e­mobility revolution just as it missed other technological changes and paid a heavy price.

The government on its part indicated that it was willing to walk the extra mile and provide additional concessions to smoothen the rollout.

The big auto makers also wanted creation of adequate infrastructure like charging stations etc before such a big rollout is implemented.

The 2019-20 Budget and the GST meeting held days after the NITI Aayog meeting, cleared the Government approach and several measures including reduction in GST rates were in the process of being implemented.

Clearly, government seems quite willing to walk the extra mile when it comes to EVs, because the stakes are high.

“If we don’t start taking the initiative now, Chinese companies will dominate Indian EV space in the coming years, and then we will have little to complain about," the government official said.

He asserted that a clear roadmap would have to submitted by every major automobile company within the next few weeks, detailing its roadmap for EV rollout.

“We will ask for a review. My assembly line, which has been set up with a large capital investment, cannot be changed overnight and transitioned in two years. That is impossible and will hit us commercially,” said an auto executive who was aware of the development.

Bajaj Auto and TVS Motor Company have maintained that any plan to ban three-wheelers and two-wheelers running on internal combustion engines was “unrealistic” and “ill-timed” and would destabilise the auto industry.

Two-wheeler market leader Hero MotoCorp said the plan to shift to electric mobility at a time when manufacturers were trying to upgrade their models to comply with BS­VI emission norms could badly impact the industry.

The NITI Aayog meeting between automakers and Government on EV rollout wasn’t the first, and going by the divergent views emerging from both the sides, it is unlikely to be the last either.

The issue at heart is the health of the nation as well as the health of Indian auto sector, which is perhaps passing through one of its worst phases with the biggest slowdown in sales in a decade.

Expecting a middle path here looks difficult in the current scenario.