What we learn from Delhi
Delhi has one of the most progressive and holistic sub-national electric vehicle policies in the country, which has become a model for other states. With an ambitious electric vehicle target reaching 25% of new vehicle registrations by 2024, the policy focuses on the electrification of shared and commercial transport.
Through: Akshima Ghate, Senior Director, RMI India & Dimpy Suneja, RMI Consultant
Delhi has one of the most progressive and holistic sub-national electric vehicle policies in the country, which has become a model for other states. Just over a year after its implementation, the policy is already providing the necessary impetus to accelerate the much-desired transition to electric vehicles and reach thresholds that could trigger mass adoption.
With an ambitious electric vehicle target reaching 25% of new vehicle registrations by 2024, the policy focuses on the electrification of shared and commercial transport. Since the notification of the policy in August 2020, efforts have been made to encourage fleet operators and on-demand mobility service providers to switch to electric vehicles. Apart from implementing purchase incentives that have made commercial electric vehicles competitive with internal combustion engine (ICE) vehicles, the Delhi government has also implemented regulatory reforms that would make electric vehicles a preferred choice for operators. For example, the Delhi government recently declared that electrical lighting products
vehicles (categories L5N and N1 with a gross vehicle weight of 1.5 tonnes and 3.5 tonnes, respectively) will be allowed to drive in Delhi even during restricted hours, a move welcomed by the industry and expected to give a competitive advantage to electric vehicles over ICE vehicles. These tax and non-tax measures are beginning to trigger the growth of commercial electric vehicles, a market that did not exist before Delhi’s electric vehicle policy. Sales of commercial electric vehicles were the highest on record after the policy was implemented. Delhi has contributed 25% of electric utility vehicle sales in the country since 2019 (785 electric taxis out of 1,609 units sold nationwide and 1,068 electric cargo transporters out of 4,035 units sold nationwide).
The Delhi EV policy offers purchase and disposal incentives in addition to the incentives offered to EVs under the FAME-India phase-II program. Thus, OEMs and operators are preparing to launch or expand their operations in Delhi. According to RMI estimates, demand-side incentives under Delhi’s electric vehicle policy, combined with exemption from road tax and registration fees on electric vehicles, reduce the cost of ownership and operation of electric three-wheelers and electric taxis by around 26 and 35% respectively.
Incentives under Delhi’s electric vehicle policy make the total cost of ownership (TCO) of commercial electric vehicles very competitive with ICE vehicles. Tax incentives complemented by non-tax provisions such as exemption from hours of idling and parking restriction, granting of permits to operate electric two-wheelers for ride-sharing purposes (electric bicycle taxis) and the provision of financing programs further make e-commercial vehicles an attractive proposition for fleet and logistics companies.
Delhi’s experience and success so far provides useful insights into measures that can help accelerate fleet electrification in Indian cities. Ease of access to incentives and deep engagement and outreach programs for the industry are some of the key government efforts that have helped spark fleet operators’ interest in fleet electrification all giving them the confidence to launch and grow operations in Delhi.
Ease of access to on-demand incentives: Several studies have shown that consumer responsiveness is low if incentives (or rebates) are distributed more than two weeks after vehicle purchase. Hence, the Delhi government has developed a user-friendly and transparent digital platform that guarantees the disbursement of demand incentives within 10 days of demand. The easy and quick disbursement of incentives is complemented by a quick redress mechanism to ensure minimal consumer complaints.
Government commitment to clean mobility: The Delhi government has led by example in the transition to clean mobility. It has mandated that all government-owned, leased or leased ICE vehicles be replaced with electric vehicles from February 2021. ICE vehicles leased/leased by all ministries, beneficiary institutions and self-governing bodies of Delhi government must be converted. to EVs by the end of their contract/agreement. Commitment to this transition not only creates and secures industry demand, but also has a demonstrative effect that can inspire others to adopt electric vehicles. As the Delhi government moves to electrify its existing fleet, it is expected to create demand for nearly 2,500 vehicles.
Ongoing engagement with industry: The Delhi government has continuously engaged with the industry to gather insights on the challenges associated with the deployment of commercial electric vehicles. Discussion forums like the Delhi EV Forum and the Switch Delhi Campaign have helped address the industry’s day-to-day operational challenges regarding timely EV adoption.
Deployment of charging infrastructure: Because installing captive charging stations to support fleet operations can be an extremely expensive proposition for aggregators, the Delhi government has launched India’s largest tender for the deployment of a public charging infrastructure. This can potentially reduce the reliance of fleet-operated vehicles on dedicated captive charging stations. The tender ensures that operators will benefit from a preferential rate for electric vehicles and encourages capital expenditure by covering the costs associated with the rental of land and the upstream electrical infrastructure.
Promote financing options for electric vehicles: To address the limited availability of electric vehicle financing, the policy provides a 5% interest subsidy for commercial electric vehicles. To implement this provision, the Delhi government has facilitated several discussions between fleet aggregators and financial institutions. An important outcome of these discussions is the creation of a pool of first-loss default guarantee funds to further incentivize financial institutions to finance the purchase of electric vehicles by sharing the risk of default.
Skills development of EV technicians and staff: Currently, fleet operators must take responsibility for training their drivers and technicians. The Delhi government has taken a two-pronged approach in providing skills development for such personnel. It plans to create a strong after-sales service network to meet the needs of the growing fleet of electric vehicles by offering these professional training programs through its world-class competence centers. The reduced cost of skill development will have a positive effect on the total cost of ownership of fleet operations.
All these measures give the right signals to fleet operators to launch and/or expand commercial EV operations in Delhi. The transparent and rapid process of disbursement of demand-side incentives, the government’s commitment to engage industry and measures to support the deployment, financing and skills development of charging infrastructure have sparked the commercial market for vehicles electricity in the city.
If the trends of EV adoption over the past 1.5 years continue alongside the implementation of various EV policy provisions, Delhi could reach almost 30% of commercial EV sales by 2025 and 70% by 2030, which would boost the EV industry and operations in Delhi and beyond. Delhi’s experience provides useful and critical lessons for other states and cities to help spark a mass deployment of electric vehicles for fleet operations.
Warning: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of Indian Express Group or its employees.
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