A good time to buy an electric two-wheeler, hold on if it's a car you want

A range of options and easy buying terms tilt the scales in favour to e-scooters; electric cars, on the other hand, are too expensive currently

Durga Rane, a Mumbai-based photographer and self-proclaimed environmentalist in her 20s, plans to buy an electric scooter instead of a petrol one. Rane says, "I'm worried about climate change and rising fuel charges, and an electric vehicle (EV) tackles these issues. Plus, it also seems like a good deal financially in the long run." Rane is part of an increasing tribe of buyers of these vehicles. Industry experts expect the Indian EV market to expand at a CAGR of 77 per cent by value between 2017 and 2025. So if you are into looking to buy one, is now the right time?

Two-wheelers versus cars

"Yes, if you want to buy an electric scooter," asserts Kaushik Madhavan, vice president-mobility at Frost & Sullivan. "In the next 6-12 months, we will see a slew of products being introduced." 

Madhavan adds, "Players are also offering flexible ownership options like buyback guarantee subscription programmes, short-term rentals etc." Keeping the likes of Rane in mind, Ola Electric launched its electric scooter earlier this month. There are several players already in the electric two-wheeler market, such as Ather Energy, Hero Electric, Bajaj's Chetak, and TVS Motor Company, Simple Energy to name a few already in this space.

But if you are planning to buy an electric car, it's better to wait. Madhavan says, "Right now in the electric car segment, most options are slightly more upmarket and more expensive. They are not within the reach of the common man."  

According to Cardekho.com, Strom Motors R3 is the cheapest electric car, while the Mercedes-Benz EQC is the most expensive one in India. Upcoming electric cars in the country include Tata Tigor EV 2021, Audi e-tron GT and Mercedes-Benz EQA among others. The prices of electric cars range from Rs 4.5 lakh to  Rs 1.17 crore, with Tata Nexon EV being in the mid range at Rs 13.99-16.85 lakh (ex-showroom). More models are expected within the next 24 months. 

Kavan Mukhtyar, partner, India Automotive Leader, PwC India says, "In the four-wheeler market, initial prices are still higher than petrol and diesel counterparts. Only for heavy users would it make any sense to get an electric car. But, if you are travelling only 10-20 km a day, then the cost difference is too high." More EV car models are expected, especially in the mid-range affordable segment within the next 12- 24 months, and that's when it might make sense to consider buying one.

EV pros and cons 

Broadly, EVs are an excellent choice. Puneet Gupta, associate director, I.H.S. Markit, a sales forecasting and market research firm, says, "The obvious plus point is that it's good for the environment, with no emission." These vehicles are easier to maintain, unlike their petrol or diesel counterparts, which have several moving parts. They are cheaper to own as well--almost 25 per cent cheaper than traditional vehicles, especially now, with fuel costs rising.  

EVs may be 10-30 per cent more expensive than their counterparts when you're buying. But once you factor in the operating cost, subsidies etc, they are much cheaper. Mukhtyar says, "The initial cost of ownership might be high, but with government subsidies and tax benefits, the initial cost comes at par, especially in the case of two-wheelers.”  Experts say that the per-km cost of running an electric scooter is about Rs 0.25 only, while that of running a petrol scooter is Rs 2.5 per km (40 km/l, Rs 100 per liter). So if you do 10,000 km per year for four years, your total fuel saving when you use an electric scooter is Rs 90,000. For an electric car, experts say that it costs you around Rs 4.2 per kilometre for the diesel vehicle, and Rs 5.7 for the petrol vehicle, while EV would cost approximately Rs 0.8 per kilometer.

As far as cons go, there are a few. Firstly, unlike traditional vehicles, the options available are limited. Government subsidies come with conditions that may not apply to all EVs. There is no price parity between electric vehicles and traditional vehicles in India. Also, consumer perception regarding EVs in India is still weak compared to traditional vehicles. Mukhtyar says, “There are still questions regarding repairs, resale value, technical issues as well as concerns about range--users are worried about reaching their destination before the battery runs out.” The common concern among prospective EV buyers is the charging infrastructure, with the available EV charging stations being concentrated in urban areas. Experts believe that range anxiety will not be as much of an issue with improvement in technology.

Finer details to keep in mind:  

There's interest in EV due the Central Government's initiative, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME)/FAME II scheme with added benefits provided by various State Governments as well. Sameer Jain, managing partner, PSL Advocates and Solicitors says, "Even the Good and Service Tax rate for EV is currently at 5 per cent  compared to that for conventional fuel vehicles, which is 28 per cent." As per the recent amendment made to the second phase, demand incentive has been increased from Rs 10,000 per KWh battery capacity to Rs 15,000 per KWh for e-two-wheelers. The cap on incentives for electric two-wheelers will be 40 per cent of the cost of vehicles. And, four wheelers have the incentive of Rs 10,000 per KWh battery capacity with a limited number of vehicles supported.

Several state governments, in a bid to encourage ownership of EVs and reduce vehicular pollution, are offering subsidies to buyers. These sometimes go up to Rs 1.5 lakh.

Tax benefits of buying an EV

If an electric vehicle has been purchased on loan, a deduction has been allowed under Section 80EEB up to Rs 1,50,000 in respect of interest paid on the loan. This deduction has been allowed from AY 2020-21 to individuals only. Kapil Rana, founder & chairman, HostBooks Limited says, "An individual may use the electric vehicle either for personal or business purposes. If an individual uses it for business purpose then he/she can claim deduction for interest paid on loan up to Rs 1,50,000 under section 80EEB. Interest payment above Rs 1,50,000 can be claimed as business expense." But to claim the outgo as business expense, the vehicle must be registered in the name of owner or the business enterprise. In order to claim deduction it is necessary for the loan to taken from a financial institution or a non-banking financial company. It must also be sanctioned between April 1, 2019 and March 31, 2023.

Table: Prices and features of some electric vehicles in the Indian market

Particulars	Ola S1  Pro	Ola S1	Ather 450 Plus	TVS iQube	Bajaj Chetak	Hero Electric
Price (Rs, Ex-showroom Delhi, post subsidy)

85,000 110,000 113,000 95,000 143,000 71,000 Price (Rs, Approx on-road Delhi, post subsidy) 90,000 115,000 118,000 101,000 150,000 75,000 Range (km) 121 181 70 75 90 108 Battery (kwH) 3.0 3.9 2.9 2.3 3.0 1.9 Charging time  5 hrs 6 hrs 30 min 5 hrs 45 min  7 hrs  5 hrs 5 hrs Top Speed (kmph) 90 115 80 78 70 45 Acceleration (0 to 40 kmph, seconds) 3.6 3.0 3.9 4.2 . .

Peak Power (kw) 

8.5 8.5 5.4 4.4 4.1 1.8

Source: Company data, Jefferies