Impact of electric vehicles on Indian economy
Just like every other thing, COVID-19 has brought a halt to all EV industries as well. After major efforts to turn the crisis down, the government has taken several steps to promote electric vehicles, clean fuels, and electricity across the country. The government's main goal is to install at least one electric charging station at each of the country's 69,000 gas stations, encouraging the diversification of electric vehicles.
According to a report by the Ministry of Statistics and Program Implementation of India (MoSPI), India's economy was down 23.9% in the second quarter of this year. The breakdown of the data by GDP shows that the construction sector was hardest hit, followed by trade, hotels, transport, and manufacturing. The sudden economic downturn that has been caused by the pandemic, coupled with the slow growth of recent years, has brought the Indian economy to a "turning point" on the road to development. India must make major structural reforms in 2021 to highlight productivity, urbanization, and resilience to bring the development into the country's employment and productivity.
Usage and popularity of electric vehicles in India will help revitalize the economy. The government wants to contribute to a turnover of 30% electric vehicles by 2030 and national production of economically feasible parts and components. Rapid implementation and production (FAME 2) policy for hybrid and electric vehicles will bring e-mobility but still, state-level programs are needed to catch up with central government programs. Few states like Rajasthan, Maharashtra, and Delhi already implemented their EV policy. Recently Odisha implemented their EV policy in which they grant subsidies on E2W, E3W, and E4W. By 2024, the government aims to register 500,000 new vehicles and provide financial incentives based on existing central government tax accounts for the purchase of individual's electric vehicles.
The current EV market in India
India has set itself a very tough target for EV adoption, but India's electric vehicle sector is still in its developing phase. But from another perspective, India offers the largest undeveloped market in the world, especially in the two-wheeler segment. Thanks to automated routes, the department allows 100% foreign direct investment. Tesla Inc., an American electric vehicle and clean energy company, recently entered India when its subsidiaries Tesla India Motors and Energy Pte Ltd in Bangalore merged. India's first luxury electric vehicle manufacturer, Ather Energy, moved its $86.5 million factories from Bangalore, Karnataka, to Hosur, Tamil Nadu at the beginning of this year. The annual production capacity of the Ather Energy plant is more than 1 lakh motorcycles.
Recently, Ola Electric, the Indian startup company Unicorn, running the largest electric scooter factory in the world at Hosur (two and a half hours from Bangalore) with all women force and already launched its Ola scooter on Independence day. The goal is to deliver 2 million units annually over the next 12 weeks for $330 million. By 2022, Ola Electric plans to expand production and produce 10 million vehicles per year, which is 15% of the world's electric scooters.
States such as Andhra Pradesh, Uttar Pradesh, Bihar, and Telangana are also making progress in expanding their cost EVCS infrastructure across the country, providing public tax infrastructure to increase the use of electric vehicles in the country, and setting impressive practice goals. Leading Indian engineering, supply, and construction company Sterling and Wilson Pvt Ltd (SWPL) recently announced their entry into the Indian electric vehicle market. On April 1, 2021, a 50-50 joint venture signed with Enel X was established to launch and build an innovative Indian Charging infrastructure that will accelerate the adoption of EV.
Electric motorcycle sales in India have increased by 21% in 2020. Sales of electric buses increased by 50% over the same period. By contrast, the EV market remains volatile, declining 5%. Total electric vehicle sales are likely to recover slowly from the initial decline in 2020. In January 2021, India sold a total of 15,910 electric vehicles, most of them in Uttar Pradesh, followed by big states like Bihar and Delhi.
In April 2019, Niti Aayog published a report titled "Transforming Electric Vehicles in India" in which the share of motorcycles and bicycles was discussed in 2030. If these targets are met, a net reduction in energy emissions of 14 AJ and 846 million tons of carbon dioxide will be achieved over the life cycle of the powered vehicle. Electric vehicles sold by 2030 could save 474 million tons of oil over their lifecycle, which amounts to $207.33 billion. This will enable India to reduce CO2 emissions and increase clean energy and transportation consumption worldwide in response to the United Nations Framework Convention on Climate Change (UNFCCC).
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