Automakers run into collision with Centre's electric vehicle plan

Two- and three-wheeler manufacturers are stoutly resisting the government’s e-mobility plan.

The government wants to ban internal combustion engine (ICE)-powered three- and two-wheelers (with an engine capacity of less than 150cc) by 2023 and 2025, respectively, and replace them with electric vehicles (EVs).

With the meeting between the NITI Aayog and auto industry executives ending in a stalemate on Friday, the two sides may continue to spar over the road map for e-mobility in one of the world’s most polluted countries. Even as the NITI Aayog has given the industry two weeks to come up with a plan on how it wants to proceed on the matter, companies such as Bajaj Auto and TVS Motor have objected to banning two- and three-wheelers and asked for at least four months to come up with a comprehensive plan that takes into account all aspects of e-mobility.

Others, including two-wheeler market leaders Hero MotoCorp and Honda Motorcycle and Scooter India, which will be equally affected by the ban, declined to comment. A revolution cannot happen on the “crutches of a ban”, Rajiv Bajaj, managing director, Bajaj Auto, told Business Standard. 

“It was a shock-and-awe meeting on Friday! Shocked because I heard that despite the claim that EVs are superior, both in terms of environment and experience, and in spite of the fiscal sops, the e-revolution can’t get off the ground unless it stands on the crutches of banning two- and three-wheelers running on ICE.” 

Sources: Society of Indian Automobile Manufacturers, companies

Bajaj said he was “in awe of the government’s apparent willingness to subsidise EVs to help them achieve reasonable price parity with engine-powered two- and three-wheelers, at an estimated minimum industry size of 25 million by 2025 and at an approximate subsidy of Rs 1 lakh per vehicle, which is a neat Rs 2.5 trillion!”

TVS Motor Chairman Venu Srinivasan has similar views.

“I don’t think it is very realistic or practical to ban two-wheelers and three-wheelers overnight. The approach has to be calibrated and well-thought through, taking into account energy, technology, and consumer needs. This is how it is being done in other markets,” Srinivasan told Business Standard. 

He added the government should focus on scrapping Bharat Stage-III vehicles. The move will cut pollution by 70 per cent. The subsidy of Rs 60,000-65,000 being doled out for EVs can be deployed to retire old vehicles and incentivise purchasing EVs, he added. 

India, the world’s largest two-wheeler market, sold more than 20 million scooters and motorcycles last year.

It is also one of the largest markets for three-wheelers and sold 700,000 units in the last financial year.

 officials who attended the high-powered meeting said switching to EVs was of national importance, so that India did not fall behind in the global drive towards environmentally cleaner vehicles.

Industry executives responded by saying that a premature switch with no established supply chain, charging infrastructure or skilled labour could result in India losing its leadership position in scooters and motorbikes.

However, the government is firm that extending the deadline is difficult, and tried to impress upon electric vehicle manufacturers that unless they acted, the courts would step in and the big players would be left with little choice.

But Bajaj Auto and TVS Motor refuse to take this lying down.  “I am in favour of monetary and other incentives to enable the transition to EVs, which are being vigorously developed by every automaker. But I’m opposed to any mandatory ban,” Bajaj said. 

India’s two- and three-wheeler industry is world-class because it makes the lowest-emission and highest fuel-efficiency vehicles in the world and exports every year more than 3 million vehicles, worth about $3 billion, he said.

And it employs across its supply chain 1 million people at home, he added. 

“We’re not on board. You can’t just stand and say five years,” said Srinivasan, suggesting that the ideal approach would be to begin with five polluted cities in India, retire old vehicles in them, incentivise purchasing EVs, and move to other cities.

Tarun Mehta, who is the co-founder of electric two-wheeler start-up Ather Energy and attended the meeting last week, said while he was not in favour of banning ICE vehicles, e-mobility could not be left to consumers. “It’s a very different reality. And it’s important from the point of view of the environment and geopolitical changes. I am not saying you ban the ICE. But I am also saying this is not a feature which can be left to the consumers to decide,” said Mehta.

Automakers also fear well-to-wheel emissions from e-vehicles will be significant, considering the power plants’ dependence on coal. 

Anumita Roychowdhury, executive director, Centre for Science and Environment, disagrees. “The choice is ours — currently we are trying to control emission from billions of tailpipes across the country. Instead, we should do very centralised control of emission from power plants.”

According to her, given the rapid pace of motorisation, EVs will help in curbing pollution. But it has to be backed by a detailed road map and a legal mandate.

With inputs from Reuters