Why It Makes Sense For India To Bet Big On Electric Vehicles

Vasanth Kamath

You might not have been to China, but you probably have heard and read about the air pollution problem out there. When we think of China, the image we get in our heads is of a person wearing a face mask and walking in smoke. But the thing to really think about is how long before this person is you or me back home in India?

Pollution levels in India have been notoriously high as well. Delhi-NCR has been in the news for rising air pollution all through the summer of 2018. Pollution levels in other major cities around the country have been above acceptable levels as well. 

There is no need for us to get into the numbers and metrics that we don’t understand. We know the air we are breathing is polluted because of the health issues that we face. From red eyes to runny noses, some of the health concerns are obvious and apparent, but the more severe ones are the ones that affect us on the inside. A recent report has linked air pollution to diabetes as well. 

The scenario paints a grim picture. But there is a silver lining on this cloud of pollution--Electric vehicles.

You might think that the Indian government is doing nothing to tackle rising air pollution, but contrary to popular belief, the government is taking the long-term measures required to ensure that the coming generations breath fresher air. One of these measures is the National Electric Mobility Mission Plan (NEMMP 2020), which was launched in 2013 to incentivize the use and production of electric vehicles in India.

Making India go electric

The government recognized the need to mitigate the adverse effects of vehicles on the environment and to enhance energy security, which is why NEMMP 2020 was conceived. In other words, the objective is to reduce pollution and conserve petroleum. 

Pollution apart, fuels prices have always been on the rise as well. Commuting in our petrol- and diesel-run vehicles is only going to become pricier. This is another problem where the solution is electric vehicles. 

The NEMMP 2020 plan aims to achieve the sale of hybrid and electric vehicles to the tune of 60-70 lakh units each year from 2020 onwards. The government plans to achieve these ambitious targets by facilitating the faster adoption and manufacturing of hybrid and electric vehicles. In 2015, a scheme was formulated under NEMMP 2020 by the Department of Heavy Industries to develop the manufacturing ecosystem in a way that will allow the industry to achieve self-sustenance by 2020. Spread over two phases, this scheme will focus on technological development, pilot projects, demand creation and building infrastructure at a cost of Rs 795 crore, to begin with.

Recently, Nitin Gadkari, our road transport, and highways minister talked about the government’s plan to go all electric by 2030. This means that only electric vehicles will be sold in India after 2030. In 2016, 25,000 electric vehicles were sold in India. We have a long way to if we want to catch up with economies like the US and China, but the infrastructure is getting set into place that we become electric, pun intended. 

The high upfront expenditure of purchasing electric vehicles that is keeping a lot of us away will diminish with the government’s endeavours to regulate and incentivize the production and use of electric vehicles. Eventually, all of us will be driving electric vehicles only. They will not only be easy on our pockets but easy on the environment as well.

As a vehicle owner, electric vehicles do make a lot of sense. But they also do as an equity investor. Investing in the stocks of companies that are helping build the electric vehicles ecosystem can be beneficial for the long-term. These companies comprise vehicle manufacturers, oil & gas refining companies, auto parts manufacturers, batteries manufacturers, power generators, etc.

The author is Founder and CEO, smallcase Technologies