Cost, range are the greatest hurdles to EV adoption: TERI Director-General

Through her maiden Budget earlier this month, Union finance minister Nirmala Sitharaman sent across a message that the NDA government will be pushing for electric vehicles while taxing conventional fuel. Ajay Mathur, director general, The Energy and Resources Institute, speaks to Jyoti Mukul, on issues relating to electrification of transport and the problems facing the automobile industry. Edited Excerpts:

How do you view the budget thrust on Electric Vehicles (EVs) and whether the IT rebate of Rs 1,50,000 will push consumers to buy EV?

The IT rebate of Rs 1.5 lakh a vehicle will help nudge some users towards buying EVs. These consumers will be, hopefully, the thin end of the wedge towards enhancing consumer acceptability of EVs, and helping build a market for them.

The government has moved the GST Council to cut tax on electric vehicles from 12 to 5 per cent. Do you think this will bring down the cost and incentivise customers to buy?

GST incentive will help greatly. At the same time, we need to go to the market and see what the consumers want. Unless that is clear, EVs will not work. 

Is there enough clarity with regard to the roadmap for EVs and why the country should move towards it?

We need to ensure that we have an EV policy that works, together with an understanding of why we want it. If our goal is to move to zero carbon transportation system, then we move vehicles to electric and electricity to renewable. Then it is possible. Both should happen together. If you want to only clean the air or if you want to only reduce the oil import bill, then there are other things to do but electrification of transport looks at all these things together. You have the benefit of clear air, lower fuel imports and the benefit of moving to zero carbon system.

Public transport systems have adopted EVs but is the adoption happening fast enough?

We need to focus on larger polluters since that will bring maximum impact. And, those are buses. Some cities got bids of Rs 80 lakh a bus and some cities got quotes for 45-70 a km. DTC pays Rs 60 for CNG bus. In my view, the price discovery has happened and electric buses are even cheaper than CNG. They are also cleaner. They are easier to recharge because they come back to depots where they can be charged.

Is enough being done by the state transport undertakings? 

No. We need the ministry of housing and urban affairs to push them. The urban transport policy of the ministry was written in an era before electric transport but it was in the direction of promoting public transport and clean (non-polluting) transport. So the FAME programme of the ministry of heavy industry and the Smart City programme of the ministry of housing and urban affairs can together help the cities in procuring electric buses.

But isn’t there uncertainty of charging and batteries?  

The greatest technical challenge is batteries. Tomorrow’s batteries will be better than what we have today but we cannot wait. As we use them, better technology will come. As far as price goes, it has been established for buses. We know the specifications. As you go to the next step, then you look at taxis and three-wheelers. In private vehicles, the biggest category are two-wheelers but two-wheeler with a battery is more costly than a petrol driven one, because of the battery cost but over its lifetime it costs less. We need business models to address this issue. Creating the marketing infrastructure so that public and private transport adopt electric vehicle is the greatest challenge. And we need to build that market demand.  

How do you get the customers to adopt if they are not sure about charge?

It is a challenge to get customers to adopt EVs. Cost and range are the greatest barriers to adoption. 

Automobile manufacturers who are a big stakeholder are not happy about EVs because they were asked to move to BSVI and they made. Do you think they are right about no policy clarity?

When you go in for new technology, you have to make it such that it is acceptable to you and me as customers. And it is desirable. Are we at that point as far as EVs are concerned? I would say “no”. To make it desirable you have to reach out to consumers with something like they are cheaper or cleaner or that it is tomorrow’s technology. Or all of these. Second, cost and vehicle’s range should be acceptable to me but we do not know this at the moment. If I was a manufacturer, I would be hesitant to manufacture something which I do not know whether the consumer wants. Once consumer acceptance is there, all manufactures will go for it.

Should there be a mandatory shift to EVs and deadlines be set?

If you are making something mandatory then you are banning something else. That leads to backlash. You may have a need to drive many more kilometres than an electric vehicle can provide. You drive whole day and you don’t have the time to recharge. Then, there is someone in a village, where there is no pollution. So he may prefer petrol or diesel. A consumer preference is a far better way of doing, than banning something.

Different consumers have different needs. When I was in BEE, there was this big thing that ban inefficient products but we did not go for it. Now, there are products available with one to five stars; one star being the least energy efficient but it costs less and is available in the market, and so is the five star rated one. Depending on your needs, you buy whatever you want. The LED bulb went through a programme bringing down its costs but incandescent bulb is not banned. If someone does not have Rs 100, he will buy that bulb. Another example is of chicken farms which need both heat and light. For them, bulb is ideal.

There is a counter argument against electrification of transport and that is power generation also pollutes. Besides, is there enough power available for vehicles since reliability of electricity is low in the country?

The total installed power capacity is 358 GW while we are not using all of it. This gap will keep meeting the increased demand for a long time. We and CEA estimate that this capacity will be able to meet demand till 2025-2027. That is the point that new capacity will be needed. This year, we completed electrifying every household but they don't get electricity 24X7 despite spare capacity. There are problems relating to distribution companies that may prefer to drop load than incur a loss. This is where we will see renewable electricity grow. Till the time grid electricity is available you take that and when power goes off, you use the renewable power. During the day, renewable energy is cheapest. We will see renewable power being used during the date for agriculture water pumps. 

Do you see a slowdown in renewable power especially in wind?

We need to worry about it. This slowdown has come about because we saw very sharp reduction in prices and the expectation is that the fall will continue. So the procurement systems, are designed to keep tariffs lower. This has become very difficult. The lowest prices are Rs 2.44 kW hour for solar. That is proving to be difficult number to go below at this point of time. 

With wind, the additional problem is that it is site specific and if bid is on a national scale, then there is a problem. If I have not bought land that has lot of wind blowing then I have to buy a lot more land to put up more turbines to match the tariff. The wind bidding should be region specific.