2020 Delhi EV Policy: Timing is right
With over 1.13 crore vehicles registered in Delhi as of March 2020, the share of EVs is a measly 0.29%. This policy with a focus on private buyers hopes to reverse this trend.
Delhi EV Policy that was put in the public domain in November 2018 and has been rolled out now. The policy is aimed at boosting the adoption of Battery powered EVs through demand incentives (read subsidies) for private buyers in Delhi by focusing on use of electric 2Ws, 4Ws, buses and goods carriers while laying down a framework for building charging infrastructure, battery recycling and funding the outlay.
While policy alone cannot sustain demand for EVs, experience with China tells us that it will help drive the demand initially post which the entire ecosystem has to come together to keep the momentum going. With COVID-19, there is a massive shift towards personal and private mobility. New business models, vehicles being sold without batteries and newer & longer range EVs (Kona Electric, MG ZS EV) being introduced in the market will help electrify transportation & reduce emissions.
Broad targets of the policy
Improve air quality by bringing down emissions from the transport sector.
Induction of 35,000 electric vehicles (2/3/4 Wheelers and buses), 1000 EVs for last mile deliveries and 250 public charging/swapping stations within the first year.
5-year roadmap of 5 lakh EVs on Delhi roads.
EVs to contribute 25% to new vehicle sales by 2024.
Establish Delhi as EV Capital of India.
2-wheelers
Purchase incentives are now linked to battery size - Rs 5000 per kWh and capped - subject to a maximum of Rs 30,000 per vehicle.
Scrapping incentive has been reduced to Rs 10,000 (equal amounts from Government and OEM/dealer) post confirmation of scrapping and de-registration of the vehicle.
Technology aggregators can run e-taxis provided they are working under government guidelines. Earlier it was required for them to have a valid license.
All delivery service providers are expected to convert 50% of their fleet operating in Delhi to electric by March 31, 2023 and 100% by March 31, 2025.
Road Tax and registration fees shall be waived.
FAME-2 eligibility criteria (top speed >40 kpmh amongst others) for 2-wheelers has been retained. This is a huge dampener in my opinion because this excludes 2Ws whose top speed is less than 25 kmph. Such scooters constituted 90% of all Electric 2 wheelers sold in 2019-20.
E-Autos
Incentivising replacement of existing ICE autos along with purchase of new electric ones with advanced batteries (any battery other than lead acid)
Purchase incentive of Rs 30,000 per vehicle to registered owner.
Interest subvention of 5% on loans and hire purchase agreements.
Scrapping incentive of Rs 15,000 (equal amounts from Government and OEM) post confirmation of scrapping and surrender of permit.
Road Tax and registration fees shall be waived.
Open permit system for e-autos with no cap on number in Delhi unlike CNG Autos which cannot exceed 1 lakh. To be issued on valid DL and PSV badge. Companies buying on their name may not get the incentive.
E-rickshaws
Purchase incentive of Rs 30,000 per vehicle to the owner. This is valid for e-ricks with all sorts of batteries (lead acid, or lithium ion).
Interest subvention of 5% on loans and hire purchase schemes.
Road Tax and registration fees shall be waived.
4-wheelers
A Purchase Incentive of Rs. 10,000/- per kWh of battery capacity shall be provided per electric four-wheeler (subject to a maximum incentive of Rs.1,50,000/- per vehicle) to the registered owners of the first 1000 e-cars.
Road Tax and registration fees shall be waived.
Caveat: applicable on only FAME-2 eligible vehicles
Buses
By 2022 ensure that e-buses constitute at least 50% of all new stage-carriage buses (public transport vehicles with 15 seats or more) procured for the city.
Starting with induction of 1000 e-Buses by 2020. Tender already out.
Road Tax and registration fees shall be waived.
Goods carriers
Preference to vehicles with gross tonnage < 3.5 tons or 3 wheeler good carriers. Such vehicles are free to do curbside idle parking and ply in city limits throughout the day, which is a big win for transporters.
Purchase Incentive of Rs. 30,000/- to the first 10,000 e-Carriers to be registered.
Interest subvention of 5% on loans and/or hire purchase scheme for purchase.
Scrapping incentive of Rs 15,000 (equal amounts from Government and OEM) post confirmation of scrapping and surrender of permit.
Road Tax and registration fees shall be waived.
Captive & Public Charging Infrastructure
To promote private charging infra, changes are proposed in building bye-laws that shall make 20% of all vehicle holding capacity/parking ‘EV ready’.
Additionally, the building premises shall have to have an additional power load, equivalent to the power required for all charging points to be operated simultaneously, with a safety factor of 1.25.
The government shall provide a grant of 100% for the purchase of charging equipment up to Rs. 6000/- per charger that comply with AC001 specifications.
Providing accessible public charging facilities within 3 km travel from anywhere in Delhi is a key objective of this policy.
Energy Operators shall setup public charging/swapping facilities with capital subsidies and SGST reimbursement
Recycling.
Even though the Indian EV industry is at a nascent stage, the government needs to map out a clear strategy on battery recycling and second life. The Delhi EV policy encourages reuse and setting up of recycling business in collaboration with battery and EV manufacturers that focus on ‘urban mining’ of rare materials within the battery.
Given the above, the recycling and re-use of lithium-ion batteries is an incredibly important process. Moreover, sourcing many of the materials used in an electric vehicle is often a difficult, costly proposition that impacts the environment. Today, a number of countries and battery manufacturers have developed the capability around this and we need to get our act together.
The policy is deceptively quiet on this hugely important topic. Hopefully central government will pay heed to this and bring out a recycling policy once the phased manufacturing plan for EV batteries is underway.
How to fund this
The Delhi EV Policy promises to be self sustainable without digging into the tax payer’s pockets too much. As such the government is proposing a ‘feebate’ concept wherin inefficient polluting vehicles incur a surcharge (fee-) while efficient ones receive a rebate (-bate).
Pollution Cess. There is already a cess on the sale of Diesel in Delhi and the government may explore a Pollution Cess on all ICE Vehicle users in future.
Road Tax: Additional road tax shall be levied on diesel and petrol vehicles, especially luxury cars. The additional tax shall be based on a sliding scale with high price diesel vehicles paying the highest additional road tax and low price two wheelers incurring a small addition.
Congestion Fee:An appropriate Congestion Fee shall be levied on all trips originating or terminating within the NCT of Delhi and taken using cab aggregator and ride hailing services.
While the timing is right, the government needs to get its act together when it comes to implementation of the policy.