Without govt help, EVs can’t fill space vacated by diesel
The government’s decision not to come up with a separate electric vehicle policy opens the door for another incentive system that could piggyback on fuel efficiency standards. Such a system is already prevalent in China and Europe.
In China, the US and Europe, the manufacturer has a target for fuel economy of its fleet or the CO2 emission. “I would imagine India would compose a credit system very similar to Europe. We do have CO2 regulation but nothing is being done to engineer the outcome on manufacturer’s ability. Generally, some engineering needs to be done to produce the change,” Andrew Fulbrook, director, global powertrain forecasting, at consultancy firm IHS Automotive told Business Standard in an interview. Europe has a super multiplier system where each low carbon emitting car or EV counts as more than one vehicle for meeting the emission reduction targets.
Experts also believe till such time governments promote electrification, there will be a gap in the auto space. Original equipment manufacturers (OEMs) are not going to be able to absorb the entire cost of emission and efficiency standards, and, therefore, diesel will become more expensive and consumers will turn to gasoline (petrol)-driven vehicles.
“Just waiting for diesel to get more expensive is not enough, governments need to invest in promoting electrification and charge points, and making sure that India has more stable power supply,” said Fulbrook. This, he feels, would mean the government getting consumers ready for a bigger challenge than just incentivising OEMs.
“For plug-in hybrid electric vehicle, it will be predominantly gasoline because of the very successful, effective and swift demonisation of diesel,” he said. The moving to BS-VI will bring a lot in diesel technology though manufacturers would have to gradually turn away from diesel. But after BSVI, diesel will become less attractive for consumers, he feels. “Gasoline comes to fore again. Hybrids will be a low volume. Even EVs will be expensive because you are asking the consumers to use a lowrange vehicle, change their behaviour which means charge the vehicle instead of spending few minutes filling up the vehicle.”
Besides, there is not a huge number of EV products to choose from. “There is demonisation of diesel and confusion, so what we will see is a gap like what we have seen in the European market. Consumers are being pushed out of diesel and they are stepping in not to plug in hybrid or electric vehicle so they are stepping into gasoline vehicle. What we are seeing is CO2 numbers not getting down but becoming flatter and flatter. We are left with a chunk of time in the middle where we have not lined up the variables. The government has not engineered the situation well. I fear that will happen in India,” said Fulbrook.
In 2023, there will be full implementation of BS-VI in India. Potentially, India could also move to implementation of real driving emission (RDE) and Worldwide Harmonised Light Vehicle Test Procedure (WLTP) laboratory test which is used to measure fuel consumption and CO2 emissions from passenger cars. OEM is not going to be able to absorb that and, therefore, diesel will become more expensive and consumers will turn to gasoline.
According to Fulbrook, the tipping point where consumers look away from diesel and look at hybrid and electric will probably be in mid-2023.
Car manufacturers work on a product cycle measured in years and so if they are looking at 2023, they have got to start strategising their portfolios and power train options, getting their supply base and getting contracts drawn up but that cannot be done if there is uncertainty, he said.