Government to subsidise electric vehicles soon

In November, last year, the ministry of heavy industries had announced its intentions to roll out subsidies for electric vehicles by April 2014. Now, according to a report in the Financial Express, this plan might soon materialise, with the Centre planning to dish out subsidies ranging from Rs 8,000 up to Rs 12 lakh, under the National Electric Mobility Mission Plan.

Talking to FE, a government official said, “The idea is that 30-40 per cent of the price differential of XeV over petrol/diesel cars will be met by the subsidy. After that, such vehicles make sense because the running cost is very low. The subsidy is expected to cost the government abut Rs 12,000 crore over six years. Discussions on the subsidy had been going on for a while with the auto industry, but automakers were not fully satisfied with the proposal. However, there is now widespread agreement and the heavy industries ministry will present the final framework to the expenditure finance committee in a month. After that, it will seek Cabinet approval when the new government takes charge.”

Electric,hybrid cars and SUVs are expected to get subsidies up to Rs 1.5 lakh, while hybrid and electric bikes and scooters will likely get a subsidy of up to a maximum of Rs 30,000. The commercial auto sector will also benefit from this scheme with light vehicles getting Rs 1 lakh subsidy. The biggest benefit though, will be reaped by hybrid buses which will get a subsidy of around Rs 12 lakh. The Centre will directly re-imburse the car manufacturers for every hybrid and electric vehicle sold through an online platform. The exact subsidy amount for every vehicle will be predefined and will vary depending on various factors like range, battery size and the actual factory price of the vehicle.

Though Hero Electric provides a huge variety of options for electric scooters in India, the market for hybrid and electric cars is still in its nascent stages. The Mahindra e2o is the only pure electric car you can buy in India right now which, despite the lack of competition, hasn’t managed to do very well in the market. Mahindra recently slashed the prices of the e2o to the tune Rs 1.7 lakh, bringing down the price to Rs 5.8 lakh (ex-showroom Delhi) for the base variant. Honda was the first manufacturer ever to offer a hybrid car in India, the Civic Hybrid, which was also a victim of a high price tag. Toyota currently is the only manufacturer which sells hybrids in India.

Mahindra, since acquiring Reva Technologies, has been extensively working with hybrid and electric cars. At the 2014 Delhi Auto Expo, it had unveiled a Halo concept, a Verito Electric as well as the world’s first diesel hybrid car, the XUV500 Hybrid. Besides Mahindra, Maruti Suzuki has also been working on hybrids as it was recently revealed that the car maker is all set to supply the Government of India with the hybrid versions of the Swift hatchback, christened Swift Range Extender, as part of a pilot project. While these cars have several advantages, they all face the common problem of high pricing. With the introduction of government subsidies though, the day might not be far away when hybrid vehicles are seriously considered as alternatives to regular vehicles.