Mr. Maxson Lewis, MD of Magenta Power takes a look on Budget and explains how will it change the industry and how does Magenta Power plan to leverage the budget announcements.
I start with my contrarian statement that the Budget 2019 is not a game changer but certainly a shot in the arm for the EV industry. Let me substantiate my opinion with what the Budget has done positively for the industry and why there is a lot more to be done.
Budget 2019 is a positive push for adoption of Electric Vehicles in India and is in line with the series of steps taken and announcements in that direction.
I find 4 points – 3 direct and one indirect point, which is also important from an EV perspective.
- While the total cost of ownership was always in favour of EV, the announcement in the reduction of GST rate on electric vehicles from 12% to 5% reduces the upfront higher cost as against an ICE engine and improves the buying decision in favour of EVs.
- The additional income tax deduction of ₹1.5 lakh on interest on loans taken to purchase electric vehicles is a bonus and the industry had not anticipated that. Credits to the government for this innovative idea to push for EV.
- A day ahead of the budget, the government lowered customs duty on import of parts and components. This will drive domestic assembling of electric vehicles, which today is plagued by Chinese imports and is actually hurting the EV industry by pushing in low quality assembled vehicles.
- Last but not the least, the EV industry belongs to start ups and will not be the domain of large monoliths. The push to simplify investments and support the Start Up ecosystem will effect push the EV growth a lot faster.
While credit is due where it is, namely to the government, whose singular focus on EV adoption is more than admirable. But even as an EV enthusiast, EV owner and an EV ecosystem stakeholder, it is always important to take a contrarian view and look at it from a different perspective. A quick list of what it will take to change the game:
- Better electric vehicle options on Indian roads. Our study and user research in this space shows that the limited or Chinese imports (in the 2W space)is one of the biggest deterrents especially for institutional and fleet buyers. There are very few options (I mean not even a handful) to serve the use cases which will push the scale. While we are all waiting with anticipated breaths for the new EV launches, scratching the surface leads to 2 insights – either expensive or either too low quality especially the battery or range. Why has 150 Kms or lesser become the default on all new and proposed EVs? This is a point I intend to discuss in a different write-up.
- Positive business narratives. I have been speaking to a lot of fleet owners and institutional customers who intend to switch to electric vehicles. But given the cost structures, unknown variables including life of batteries in Indian climatic conditions, their business cases for the switch are not stacking up. There are pioneers in this space who are taking the plunge, but the risks are still not covered and run the probability of hitting bottom.
- Charging Infrastructure. While Magenta Power is focussed on the business of setting up charging infrastructure, we also know the pains of setting and operating one. I have been sharing those in multiple forums including seminars and conferences. While some challenges, we have been able to overcome, there are other challenges which are far from being solved and require the might of big money. Case in point is one of our charging stations on a key highway which was getting high usage from EV owners. This caught the attention of the local utility (government owned), whose only reason to keep tripping it off was uniformed minds and greasy palms – ‘we do not know what this is so we cannot allow it to run’.
- Government rethink. The government is focused on EV and is pushing for local agencies to setup charging infra and e-Mobility solutions. But the starting point for this is a qualification criterion of minimum 3 years existence/ operations / etc. How does this criterion serve any purpose in an industry which did not exist a few months ago and where the best ideas are coming from young minds and start-ups who will never meet those criteria. New ideas need newer ways of implementation especially when an ecosystem is involved. The standard route of tendering (or the way it is run today) is bound to tip the scales against newer ideas.
The idea of this article was to take a guarded approach to the huge noise around EV. While noise brings in attention and positivism, it is the work of those who chip away in silence that will bring in the change.