Subsidies offered under the Delhi government’s recent electric vehicle (EV) Policy 2020 for retail consumers could trigger faster EV penetration within the capital territory, rating agency ICRA said on Tuesday.
Accordingly, the rating agency said the policy seeks to drive rapid adoption of battery electric vehicles with the goal of reducing pollution within the nation’s capital.
“It offers subsidies, waivers, and incentives on the acquisition of EVs on the one hand and dis-incentivises use of conventional viz., combustion Engine (ICE)-based vehicles on the opposite,” the agency said during a statement.
“The incentives are going to be offered across segments like electric two-wheelers (e-2W), e-rickshaws (3W), goods carriers, electric cars, and buses and can be incremental to those offered under the FAME-II scheme.”
According to the agency, 2Ws are the dominant mode of commute in India and with the continued pandemic, the preference for private vehicles is predicted to extend further.
“The subsidies and incentives offered under the scheme for retail consumers and makers could, therefore, provides a long-needed push for faster EV penetration and development of this ecosystem in New Delhi,” the statement said.
As per ICRA, including the FAME-II incentives, the upfront e-2W prices would become 25-30 per cent less than conventional 2Ws (for basic models), thereby proving to be a catalyst for accelerated e-2W penetration.
“We believe that the policy holds multiple attractive propositions for potential e-2W customers. the priority for deteriorating pollution conditions within the capital had already been gaining momentum for the past a few years,” Shamsher Dewan, vice chairman, ICRA, said within the statement.
“With a progressive EV Policy in situ, the 2W customers are going to be ready to contribute towards alleviating things while taking advantage of the lower upfront cost also because of the total cost of 2W ownership.”
Dewan said the high upfront cost of the e-2W vis-a-vis conventional 2Ws has been one among the most hindrances to faster e-2W penetration, which can get addressed through the attractive incentives under the policy.
Besides, the ICRA acknowledged that scrappage incentive may be a first of its kind in an EV policy, whereas industry response to the need of matching participation by OEMs or dealers and de-registration of conventional 2W remains to be seen.
“In addition to sizable cost savings to both the buyer and therefore the government (on crude imports), several non-economic factors also are conducive for faster electrification in 2W segments, like lower dependence on commercial charging infrastructure, range per charge meeting daily commute requirements, growing environment and health concerns, among others,” added Dewan.