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Gujarat Announces Electric Vehicle Policy
Simran Kaur
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Published on 24th Jun 21

Gujarat Announces Electric Vehicle Policy

In India, electric vehicle (EV) adoption is rising steadily, and the Gujarat government took another move today to accelerate the state's EV adoption. The Gujarat State Electric Vehicle Policy 2021 comprises a four-year investment plan of Rs 870 crore to be utilised as a subsidy/incentive for new purchasers of electric vehicles across all industries, as well as for those participating in the development of EV infrastructure.

At a press conference, Vijay Rupani unveiled the Gujarat EV policy, outlining the benefits it provides to individuals who acquire a two-wheeler, three-wheeler, or four-wheeler, as well as those who build charging stations in the state. This new benefit is in addition to the existing FAME-II national subsidy scheme. Gujarat estimates that this will save the state around 5 crore rupees (approximately $870,000 USD) in fuel expenditures and result in a reduction of 6 lakh metric tonnes of CO2 emissions over the next four years. 

What are the benefits of Gujarat's EV Policy 2021?

The Gujarat government's initiative would provide incentives to purchasers of three types of electric vehicles — two-wheelers, three-wheelers, and four-wheelers (which will be in effect until 1 July 2025). The policy intends to subsidise the acquisition of 200,000 electric vehicles, including 110,000 two-wheel electric vehicles, 70,000 three-wheel electric vehicles, and 20,000 four-wheel electric vehicles.

Although the incentive is the highest in the world at Rs 10,000 per kWh of battery capacity, the entire subsidy is capped at Rs 20,000 for electric scooters and motorcycles, Rs 50,000 for e-rickshaws, and Rs 1.5 lakh for electric cars and SUVs. These incentives will be credited directly to the purchaser's bank account upon validation of the vehicle's purchase papers.

Take note that this incentive is offered only to electric vehicles that achieve a particular price threshold. To qualify for this incentive, the price of an e-two-ex-factory bike cannot exceed Rs 1.5 lakh. Similarly, the threshold for e-rickshaws is Rs 5 lakh, while the threshold for electric vehicles is Rs 15 lakh. Notably, the benefit is accessible to those who purchase vehicles for both personal and commercial use.

Due to the price cap, the majority of electric vehicles now on the market (including the Hyundai Kona Electric, MG ZS EV, Mercedes-Benz EQC, and Jaguar I-Pace) would be ineligible for Gujarat's subsidy. However, the Tata Nexon EV, with a starting price of Rs 13.99 lakh, will benefit from this strategy, since it will be eligible for the full Rs 1.5 lakh discount, bringing its purchase price closer to the one in Delhi.

Concerning electric two-wheelers, all-electric motorcycles and scooters equipped with a 2 kWh lithium-ion battery will be eligible for the full Rs 20,000 incentive. Ather 450 Plus and 450X costs are expected to decline to Rs 1.07 lakh and Rs 1.27 lakh, respectively, while TVS iQube and Revolt RV400 pricing should remain well below Rs 1 lakh. The TVS iQube's ultimate price in Gujarat (when it comes in the coming months) would be closer to Rs 90,000 with the Rs 20,000 incentive, while the Revolt RV400's final price may be as low as Rs 87,000. Other makers of electric two-wheelers are anticipated to hike their pricing in Gujarat as well.

To sweeten the deal, even more, the Gujarat government would waive the registration fee for electric car owners, substantially reducing the cost of ownership.

What are the benefits of Gujarat's EV Policy 2021 for developers of charging infrastructure?

Gujarat presently has 278 charging stations, and this initiative seeks to instal 250 more, increasing the total to 528. To this aim, the administration has indicated that it will approve the installation of EV charging stations at petrol stations around the state.

Capital subsidies of up to 25% will be offered to those who construct the first 250 commercial public EV charging stations (limited to Rs 10 lakh per station). Additionally, for the length of the scheme, Gujarat would exempt EV charging stations from power charges. Additional details on how developers may take advantage of this incentive will be made available in the coming months.

Additionally, the regulation mandates all residential and commercial companies to issue a 'No Objection Certificate' (NOC) to members wishing to build charging stations and provide parking spaces.

What does Gujarat's Electric Car Policy 2021 have to say about the electric vehicle industry?

"We commend the Gujarat government for adopting a promising and ambitious EV strategy," said Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV). The programme has the potential to convert Gujarat into an EV hub and boost the state's electric vehicle adoption. We are honoured to be a part of this adventure and will do all possible to assist the state government in accomplishing the policy's aim. Additionally, the strategy prioritises charging infrastructure, which alleviates range concern for individuals considering purchasing an electric four-wheeler.”

Gill, who is also the CEO of Hero Electric, stated that the company predicts a "multiplication" in the state's low-speed two-wheeler sales.

Tarun Mehta, co-founder and chief executive officer of Ather Energy, also lauded Gujarat's new electric car legislation.

"Gujarat's new electric vehicle policy is a daring move that will have a substantial impact on the state's EV adoption rate. Gujarat has long been a pioneer in encouraging green mobility through a number of innovative laws and projects, most notably the plan to build Kevadia as the world's first all-electric metropolis. The government's offer of a subsidy equal to twice the cost of each kWh, compared to any other state, would position it as a top destination for electric vehicles. The incentives will assist reduce the cost and accessibility of electric cars for end customers while also expediting the construction of the state's charging infrastructure. Progressive policies will almost certainly hasten the country's adoption of electric mobility,” Mehta added.

Along with Gill's statement, Naveen Munjal, Managing Director of Hero Electric, stated, "The state of Gujarat's revised EV policy in light of recent changes to the federal FAME policy is an excellent move that will further bridge the divide and make the switch to electric vehicles an attractive option." Hero's electric vehicles will experience significant price reductions as a result of this law, making them the most affordable in Gujarat when compared to national pricing. Additionally, investing cash and capital in new charging stations would help build a much-needed charging infrastructure and ease consumer range anxiety. As Hero Electric increases its reach, instals charging stations, and retrains mechanics to create an ecosystem for EVs, more state government subsidies through such measures would help in the expansion of EVs and transform the industry into a cleaner, greener mode of transportation.”

"We appreciate the Gujarat government's decision to give financial support for all types of electric vehicles," said Shailesh Chandra, President, Tata Motors' Passenger Vehicle Business Unit. This reflects the government's steadfast commitment to a more sustainable future for the country. Additionally, help with the building of charging infrastructure will accelerate the ecosystem's growth and improve the convenience of EV consumers. We commend the Gujarat administration for enacting such a novel policy.”

Mr. Mahesh Babu, CEO of Mahindra Electric Mobility Ltd, expressed his joy at the regulation change, adding that it will likely enhance sales of the brand's Treo electric three-wheeler in the state.

“We applaud Gujarat's government for announcing a new electric car policy that is both creative and comprehensive. The Rs 870 crore investment over the next four years would contribute to the expansion of electric cars in Gujarat. The strategy details detailed implementation techniques, most notably in the final mile transportation sector. The government's fiscal incentives will directly help the end customer, while the non-fiscal advantages will aid in the growth of the state's complete electric car ecosystem. Mahindra is thrilled to deploy products such as the Treo three-wheeler range, which will enable customers to earn more owing to lower operating costs and will help Gujarat become a leader in electric vehicle adoption in the country,” Babu added.

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