As the COVID-19 pandemic continues to take the planet by storm, the surge in demand for electric vehicles is likely to prove to be a silver lining in these unprecedented times.

As the COVID-19 pandemic continues to take the planet by storm, the surge in demand for electric vehicles is likely to prove to be a silver lining in these unprecedented times. The Indian automobile industry is one of the largest in the world, and it is currently undergoing a transformation with sales of electric vehicles rising with every passing year. The government’s push to ensure EV adoption through subsidies and tax benefits has further propelled the market growth. There are various factors that come into play for the current surge in demand for EVs in India.

Delhi EV Policy’s Boost

On 7th August 2020, the Delhi Government took an exciting step towards battling air pollution and adopt clean mobility through its EV policy. The policy aims to address the problem of deteriorating air quality in Delhi, which threatens the quality of life and health of the Capital of India. It emphasizes on the need for the city's mobility system to adopt an energy-efficient and low emissions trajectory. 

The main pillars of the Delhi EV Policy focus on driving EV adoption through fiscal and non-fiscal incentives. It further encourages upfront purchase incentives, scrapping bonuses, and loan interest waivers for purchasing electric two-wheelers, cars, auto-rickshaws, e-rickshaws, e-carts, and goods carriers. Apart from these fiscal incentives, the policy also provides non-fiscal incentives in the form of waiving off-road tax and registration fees and green-registration plates.

Apart from these incentives, the policy also encourages the re-use and recycling of EV batteries that have reached the end of their life. In partnership with energy service providers, the Delhi government aims to develop a framework for the efficient recycling of batteries and the promotion of the second-life of batteries as “power banks” to store renewable energy. These incentives are intended at accelerating demand creation and instill confidence in consumers and the industry.

Impact of COVID

India is currently the largest 2-wheeler market in the world and has sold 1.7 crore vehicles in the previous year. Despite that, a huge population is still dependent on public transport for their everyday commute. After the lockdown, the consumers are likely to be more inclined towards using personal vehicles for commuting as the new normal now includes optimum hygiene and social distancing. This might lead to the creation of an opportunity to be leveraged by the EV industry.

Other segments that will come into play is environmental consciousness and fuel costs. During the lockdown, people have noticed clearer skies and fresh air that has led to a greater appreciation for the environment. With the prices of oil, rocketing sky-high, an alternative that seems viable for people is to opt for electric vehicles.

Cost Parity with Internal Combustion Engine [ICE] vehicle

One of the biggest challenges that the EV industry faces is cost parity with ICE vehicles. The most expensive component of an EV is the battery pack. EV manufacturers are working towards the localization of these batteries so that EVs can be made more affordable for everyday consumers. Not just batteries but the EV industry also needs support for building the required infrastructure and advancing the current fiscal subsidy limit provided under the FAME II program.

Hence, it will be apt to say that all the above factors are pushing for faster adoption and a path of success for electric vehicles if the right institutional and procedural mechanisms are put in place rapidly and efficiently.

Boost in Employment Opportunities and Skills required

A surge in demand for electric vehicles is likely to pave the way for job creation as a key outcome. There are several new-age start-ups and Original Equipment Manufacturers (OEMs) that are setting up manufacturing units to fuel clean mobility. Electric vehicles continue to witness an influx of innovation in technology (since it is a growing space) and business models to help reduce the cost of ownership and as a result, adds to job opportunities. Apart from start-ups and OEMs, it will also create a large number of employment opportunities such as EV drivers, auto-mechanics, charging station operating staff, among others. 

With new job opportunities emerging, increased focus on skilling is also the need of the hour. One of the challenges is transitioning from ICE vehicles as it is new and different to the users. Hence acquiring new skills will be required in the research and design space as well as in the areas of manufacturing, sales, servicing and driving. As a result, the existing workforce transition will need a clear strategy. Retrofitting existing vehicles too will lead to further job opportunities, which will need a good knowledge of ICE technology, and provide a platform for existing ICE technicians to upskill themselves.

Getting the skills right during this transition phase in developing technology and infrastructure, will further facilitate the ambitious dream of clean mobility to turn into reality in the country.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house