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Optimise budget push to electric vehicles with mobility innovation

Optimise budget push to electric vehicles with mobility innovation

Motor vehicles exhaust is one of the main reasons. As per UEInfo, it accounts for 30% of PM2.5 concentration in greater Delhi’s ‘airshed’. So, yes, EVs will address the issue of tailpipe emission.

Amit Bhatt 

Last week’s Union budget gave a further impetus to electric vehicles. The GST on electric vehicles (EVs) was reduced from 12% to 5%. An additional income tax deduction of Rs 1.5 lakh was proposed on the interest paid for buying EVs. In addition, the budget also increased the price of petrol and diesel by Rs 2 per litre through an additional cess, creating a further nudge towards the EVs. This comes after the government initiated the second round of the Faster Adoption and Manufacturing of Electric Vehicles in India, also known as FAME scheme. FAME 2 has an allocation of the Rs 10,000 crore and looks to bring 15 lakh electric vehicles in India in the next three years.

One of the main reasons for pushing EVs is increasing air pollution. India houses 14 out of the world’s 15 most-polluted cities. The IQAir AirVisual and Greenpeace data found Gurugram to be the most polluted city in the world. The Lancet Commission on Pollution and Health estimated that 25 lakh Indians lose their lives prematurely due to air pollution every year.

There are multiple sources behind India’s toxic air. Motor vehicles exhaust is one of the main reasons. As per UEInfo, it accounts for 30% of PM2.5 concentration in greater Delhi’s ‘airshed’. So, yes, EVs will address the issue of tailpipe emission. But will electric cars and electric two-wheelers address the larger mobility issues in our cities?

Unfortunately, no. Not unless we change the paradigm of electric mobility. Here are three ways we can do it.

Shared mobility

Currently, electric vehicles have a high upfront cost, but their operation cost is low. This makes them a perfect case for shared mobility and what better form of shared mobility than buses. The biggest deterrent to scaling public transport in cities is the high cost of operations. Manpower and fuel account for 2/3rd of the total cost of operations. Involving the private sector does address the manpower cost, but fuel is still a challenge. This is where the electric bus can be an asset.

If the government can support the initial upfront cost of these buses then the agencies can take care of the operations and maintenance. The FAME 2 scheme does provide some support to the state transport undertakings (STUs).

Private fleet operators also get the support for running taxis, but they are excluded from bus operation. This needs to change. The support should be extended by the Central and the state governments to any public transport operator, be it public or private.

Freight delivery

Freight is probably the most neglected area in the transportation sector in our country. As per a NITI Aayog report, the share of logistics cost in the final price of a product in India is around 18%. In developed countries, this share is almost half. Also, in many cases, last-mile operations account for over 50% of total shipment costs. This shows that freight delivery is inefficient in India. In addition, it is also seen that currently, the vehicles used in freight delivery emit a greater proportion of pollutants than passenger vehicles, due to which many cities have put a restriction on entry of freight vehicles. This not only makes them inefficient, but also increases the cost of logistics. Therefore, electric vehicles provide a great opportunity to address some of these fundamental issues. The FAME 2 scheme does not address the issue of freight nor does the budget. Therefore, it is important that some incentive structure is developed around freight vehicles.

Mobility innovation

Roads and highways have shaped development in our urban areas, for good and bad. Similarly, electric vehicles have the potential to influence urbanization as well. For example, the presence or absence of charging infrastructure can potentially influence the traffic flow and thereby impact urban development. Similarly, the presence of charging points in parking lots can reorganize parking completely. In addition, electrification can lead to development of some new and innovative mobility products. The rise of pedal assist bicycle in Europe is one such example. The electric scooters that are flooding the cities in the US are another example. Therefore, cities should leverage electric mobility to develop an innovative solution which is relevant to their context.

Electric vehicles are already cost-competitive in many categories—lifecycle cost—and by 2025 they will also be cost-effective in terms of the upfront cost. Therefore, if cheap electric vehicles result in greater use of personal modes then the benefits will be lost. This is where cities such as Gurugram can make a difference.

The modern Gurgaon started in the 1970s when Maruti Suzuki set up its manufacturing plant. Today, half of the Fortune 500 companies have their offices here.

We must seize this opportunity to kick-start an e-mobility revolution for our city and Haryana; to further our economy and achieve sustainability. Else, even with our electric vehicles, we will be stuck in a ‘clean congestion’ or maybe witness ‘low-emission traffic crashes’. Both of which are unwarranted.

(Amit Bhatt is the director- integrated transport, WRI India)