Musings on Indian EVs
Of the 20 most polluted cities in the world, 14 are Indian. And surprisingly enough, we only have 12 EVs on sale in India.
The breakdown is even more bonkers:
Five cost more than Rs. 1 crore;
Three cost more than Rs. 45 Lakhs;
Two cost between Rs. 20 Lakhs and Rs. 30 Lakhs;
And only two cost less than 20 Lakhs. Only two EVs for the common folk, and that too at a significant premium over their ICE counterparts.
In a nation where the bottom 50% makes only 13.1% of the total income, the top 10% command over 64.1% of the income, and the average annual household income is Rs. 9,83,010 ($12,579), how the f*** does the government expect to make good on their lofty promises of green riches if they can’t promote schemes that enable mass EV sales. We are currently sitting on an EV disaster from a consumer and supply chain POV as the government seems content with a lacklustre display of results and an exaggerated display of expectations.
Bloomberg Opinion recently reported on Tesla CEO Elon Musk’s plans to meet with the Indonesian Prime Minister to discuss potential investments to develop the country’s nascent EV supply chain. Indonesia, a country with a population smaller than India’s, conglomerates that cannot match the scale of our biggest ones, and a geography that is inundated with problems, is performing better than India on the global green stage. How? Well, the answer is quite simple if you ask me. The government is unwillingly to lower their atrociously expensive tax scheme, offer attractive EV schemes, and open their borders to global manufacturers.
Elon Musk had conveyed his interest in the Indian EV market as early as 2018 to much fanfare from the Indian audience. Since then, while the EV vanguard has continued expressing the same feeling towards our markets, the government has done little to make those dreams a reality for not only Tesla but also the millions of Indians waiting for a Tesla. They continue shoving the same playbook of high import duties down every interested foreign manufacturer's throat. Let me ask you, is it not reasonable for a company to test the waters before making any sizeable commitment and investment in a market? Even an eccentric businessman like Musk understands the importance of protecting one's investment but not the saner (at least I hope so for our sakes) Indian finance ministry.
To an extent, I would have been understanding of the policy’s ability to create an opportunity for the domestic auto industry, but no. No, to that isolated chamber they are making. To be a global player, we must have a long-shot view of things. The present long-shot picture looks abysmal at best due to the industry’s lack of technology, lack of experience, and, most importantly, lack of commitment. Maruti Suzuki, the largest automaker by market share, has confirmed that it will not be entering the fray before 2025. Hyundai, the second-largest, doesn’t even have a timeline. The facts speak for themselves here. If these two car makers cannot commit to EVs, then you cannot expect things to change anytime soon because, without their support, we don’t stand a chance at creating affordable, mass-market EVs. Tata and Mahindra are both burning the candle at both ends, and, yes, they are doing a decently remarkable job. But, in Mahindra’s case, the problem arises not only in its market share but also in its sales volume, desirability, and footing with the Indian consumer. Tata has made strides on all three fronts and continues to do so. All that bodes well for its EV sales, but a single carmaker with a constrained R&D budget, as compared to global peers, and only two models on sale cannot make headways in this regard. What Maruti Suzuki and Hyundai have in the Indian market no other car maker can match, and that's a fact. A fact set in stone for now. So if the two are not committing to EVs anytime soon, you can rest assured that they know that the Indian people are also not ready for not, which is a disastrous predicament for the nation.
I wrote about the government’s EV policy back in February. And contrary to my initial apprehensions, I had recently concluded that, yes, the government could have a shot at a successful EV policy. But, frankly, today, the way things stand, I am not only unsure about their policy to accelerate EV penetration but am also unsure about their commitment to the cause. For all its fanfare, FAME-II has also not lived up to the expectations because there aren’t enough EVs for the common folk on the roads to make the policy successful. And even if we discount the problem posed by a lack of cars, the policy is not in a position to offer subsidies the way the West can. America currently offers a standard $7500 subsidy on each EV sale, which amounts to a substantial Rs. 5.86 Lakhs. The Indian government’s coffers are in no position to match that amount. PM Modi, FM Sitharam, and Gadkari can talk big about their vision for the country’s EV charging, supply chains, and sales, but for now, they have shit to show for all their talk.
And I don’t expect to see a vast improvement soon. They just don’t have what it takes to walk the talk right now: money.
The government is in a near-broke position. Don’t believe me? Business Standard reported that the government’s interest payments are about to consume more than half of their tax collection for this and the next fiscal year. The remaining balance revenue doesn’t leave the government with the fiscal headroom required to focus on new-age initiatives like EV penetration. The problems don’t end there. The government’s lack of fiscal headroom forces it to borrow exponentially high amounts yearly to fund essential capital expenditure in areas like defence and welfare. The government is in a debt trap, and considering the present situation, getting a handle on its debt will be achievement enough for the government.
Seeing the Indian people lose a chance, a shot at what could possibly be one of the century's biggest industrial stories is excruciating, but there seems little hope for the time being. The government’s finances allow it little legroom to exercise ambitious policy initiatives that could potentially erode precarious revenue figures. Pollution seems to be the least of our problems, with inequality, poverty, and inflation creating an impossible situation for the poor and the middle class, which constitute a large proportion of our population. Rising interest rates globally and domestically further affect our fiscal budget as with rising interest rates, we will see increased interest payments. All this is going to decrease the little room for manoeuvre that we had. To top it all off, the headwinds from oil only seem to be increasing daily. We are genuinely in shitty times; pardon my French. Not only do we stand to miss this opportunity of a lifetime, but we also stand to gain a financially weak economy riddled with bullets. Things will take a turn for the better, but we must be patient and generous with time. Only time can help resolve the multitude of problems we are facing today. Once those subside, we can expect the government to focus its energy, time, and resources on new-age ventures like EV vehicles.