Go for an electric car if you are a heavy user
Electric scooters, on the other hand, have turned into a viable option for most buyers
The future of automobiles is electric. With several electric vehicles (EV), both cars and scooters, being launched over the next 6-12 months, Indian consumers will soon be spoilt for choice. Tata Motors opened the booking for its Tata Tigor EV recently ahead of its launch on August 31. And Ola Electric launched two e-scooter offerings last week — Ola S1 and S1 Pro.
Easier to maintain
EVS are easier to maintain than their petrol and diesel counterparts since they have fewer moving parts.
With fuel costs skyrocketing, the total ownership cost can work out to be lower for them than for traditional vehicles. Their purchase cost may be 1030 per cent higher, but once you factor in the running cost, subsidies, etc, they work out to be cheaper over the tenure of ownership. This holds especially true for two-wheelers.
The biggest benefit, of course, is that they are non-polluting. Puneet Gupta, associate director, I.H.S. Markit, a sales forecasting and market research firm, says, “There is no emission, so they are good for the environment.”
Fewer options available
Unlike traditional vehicles, the buyer has a limited number of options currently in the electric space. And while government subsidies are available, they come with conditions attached, so they can’t be availed on every EV.
Consumer perception of EVS is still weak. Kavan Mukhtyar, partner, India automotive leader, PWC India says, “There are still questions regarding repairs, resale value, and technical issues.”
The biggest concern pertains to range. Mukhtyar says, “Users worry that the battery may run out before they have reached their destination.” The availability of charging infrastructure, especially beyond the metros, is an issue. However, range anxiety may not remain such a problem in the near future.
Cars: Cost barrier still high
Electric cars are still a few miles away from mass adoption. Kaushik Madhavan, vice president-mobility, Frost & Sullivan says, “Most options are upmarket and expensive.”
The price of electric cars ranges from around ~4.5 lakh to ~1.17 crore. According to Cardekho.com, Strom Motors R3 is the cheapest EV while the Mercedes-benz EQC is the most expensive one (see table).
According to Mukhtyar, “Electric four-wheelers cost more than their petrol and diesel counterparts. Only heavy users should buy one. If you are going to drive for only 10-20 kilometres (kms) a day, then the cost difference is too high and buying one will not make economic sense. If at all you buy, do so for environmental or emotional reasons.”
More models are expected, especially in the mid- and affordable segments, over the next 12-24 months. Potential buyers may reconsider then.
The running cost of an electric car, too, is much lower: It is around ~4.2 per km for a diesel vehicle, ~5.7 for a petrol one, and only around ~0.8 for an EV.
Electric scooter: Let the ride begin
In case of an electric scooter, we are well past the inflection point. Madhavan says, “This is the right time to buy an electric scooter.” He adds that players are offering flexible ownership options, like buy-back guarantee, subscription programmes, short-term rentals, etc.
The key manufacturers of electric two-wheelers currently are Ather Energy, Hero Electric, Bajaj, Ola Electric, TVS Motor
Company, and Simple Energy, etc. Expect a slew of launches over the next 6-12 months.
Experts say the per kilometre running cost for an electric scooter is around ~0.25 per km. In comparison, it is ~2.5 per km (40 kmpl, ~100 per litre) for a petrol scooter. If you ride 40,000 kms in four years (10,000 km per year), your total saving on fuel would be ~90,000.
Subsidy benefit
The central government provides subsidies to EVS under the Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME/FAME II) scheme. State governments provide additional benefits which can go up to ~1.5 lakh. Sameer Jain, managing partner, PSL Advocates and Solicitors says, “Even the Goods and Services Tax (GST) rate for EVS is 5 per cent compared to 28 per cent for conventional fuel vehicles.”
According to the recent amendment made to the second phase, the demand incentive has been increased from ~10,000 per KWH battery capacity to ~15,000 per KWH for electric twowheelers. The incentive has, however, been capped at 40 per cent of the total cost for them.
Four-wheelers also get an incentive of ~10,000 per KWH battery capacity, but it extends to only a limited number of models.
Tax advantage
If you purchase an electric vehicle on loan, you can avail of a deduction under Section 80EEB of up to ~1,50,000 on interest paid. This deduction has been allowed from the assessment year 2020-21 to individuals only. Kapil Rana, founder & chairman, Hostbooks Limited says, “An individual may use the electric vehicle either for personal or business use. If he uses it for business purposes, then he can claim a deduction on interest paid up to ~1,50,000. Interest payment above ~1,50,000 can be claimed as a business expense.” To claim it as a business expense, the vehicle should be registered in the name of the owner or the business enterprise. The loan must be sanctioned between April 1, 2019, and March 31, 2023.