TIME TO BE REALISTIC
Are we truly ready for electric cars?
The industry was waiting with bated breath for the outcome of the government’s meeting of 9 September to fine-tune the GST rates. When the announcement came, it was apparent that the government had backtracked a little and that the full-blown effect of the proposed increase in cess was not going to be imposed. Instead, a two, five, and seven per cent cess was imposed on mid-sized cars, luxury cars and SUVs respectively. The response of the auto industry was mixed. While some companies heaved a sigh of relief, others kept mum and still others were vocal in their criticism. Is the GST problem for the auto industry done and dusted? Far from it. The reasons are as follows:
Countries like the UK and France have set the deadline of 2040 for cars to go electric. India has set a deadline of 2030. The Indian deadline is extremely ambitious and will require more than a Herculean effort to meet for the following reasons: We are not a power-surplus country We have dramatic voltage fluctuations We have constant power black-outs We do not have billions to spend on infrastructure Charging points need to be installed all over the country Residential locations would need hundreds of charging points How to charge a user for these charging points is still not determined How to prevent misuse of the charging points also needs to be determined Finally, on the basis of current technology, one charging point used for eight hours will consume more electricity than several households put together. How will we cope, especially if all users charge their cars at night when power consumption peaks?
Today, all the battery suppliers for electric vehicles are situated in China. They can be attracted to India but this is not going to happen overnight. Consequently, we will have to import batteries for cars. India’s reserves for lithium are unknown and need to be determined urgently; otherwise, lithium will become another drain on the import bill.
The correct solution, therefore, is to start from the basics by looking into raw materials like lithium, setting up plants for the manufacture of batteries, setting up charging stations and, finally and most importantly, beefing up our electricity supplies. All this is going to take time. We may set targets but under Indian conditions, these are almost never achieved. An example: the rate of construction of roads in India.
The current auto policy (with related GST rates) fails miserably from a short-term and medium-term point of view:
AD 2040 would be an altogether more realistic deadline for banning fossil-fuel cars. Whilst it takes years for infrastructure to be set up for electric cars, the auto industry can introduce hybrid vehicles in the space of months. Our auto policy has singularly failed to recognise this, with the result that hybrid vehicles are taxed at a higher rate of 43 per cent. The auto policy has also failed to recognise that hybrid vehicles come in all shapes and sizes and taxing all of them at 43 per cent is again a mistake. In fact, all hybrid vehicles should not bear any cess. The government can make this change, even now. Car manufacturers will bring in hybrid vehicles of all sizes very quickly with immediate benefits in terms of emission and pollution.
The transport minister has severely castigated the use of diesel. At the same time, he turned a blind eye to the fact that diesel in India is considerably cheaper than petrol. In Maharashtra, the difference is nearly Rs 17 per litre. A litre of petrol costs only Rs 26 but is sold to the consumer at Rs 79. The same equivalent price in Pakistan is Rs 41 and in Sri Lanka Rs 49.80. Yes, taxation of petrol is extortionate and needs to be reduced dramatically. Where the Central and state governments are ruled by the same political party, there should be no excuse or delay in reducing the tax on petrol; otherwise, the share of polluting diesel vehicles will continue to increase.
Finally, the movement towards electric vehicles should not ignore alternative fuel cell technology. Fuel cell vehicles are being manufactured by companies like Honda, Hyundai, and Toyota and are fuelled by hydrogen which can be produced by the electrolysis of water. Hydrogen refuelling stations can easily substitute petrol stations because it takes only about three minutes to refuel a hydrogen fuel cell car.
Let’s not keep all our eggs in one basket.
“The Frankfurt Auto Show which was held in September had all the exhibitors flaunting their electric and hybrid models. Diesel models were relegated to the back of the stands”
Story: H S Billimoria ( Above) The Honda Fit (Jazz) hybrid
Below) The Toyota Auris hybrid