Electric Mobility Paradigm Shift : Capturing the Opportunities – Yes Bank & TERI Report

Indian mobility sector is one of the fastest growing in the world with the number of motorized vehicles per 1,000 population seeing a threefold increase from 53 in 2001 to 167 in 2015. However, in comparison to developed markets like USA (795) and EU (573) it remains very low, indicating the growth potential of the mobility market in India. Currently, the transport sector in India depends almost unilaterally on imported oil to meet 98% of its energy requirements. Crude oil imports accounted for USD 86 billion or 22.6% of all imports in 2016-17.

The sector emits 142 million tonnes of carbon, accounting for 7.5% of all emissions in the country, making emissions and air pollution critical sustainability challenges associated with it. This report, “Electric Mobility Paradigm Shift: Capturing the opportunities”, presents the triple benefits of increased energy security, carbon mitigation and improved air quality in cities that can be achieved by adopting electric mobility in India. In addition, India can potentially save USD 27.8 billion in foreign exchange annually by 2030 if the electricity is sourced from renewable sources. Government of India has rightly put its weight behind achieving 100% electrification of all vehicles in India by 2030.

The report assesses the policy landscape and showcases the support measures provided by the Government towards increasing penetration of EV and transition to this new mobility paradigm. The report sets the roadmap for transition by identifying three front runners including two-wheelers, three-wheelers and buses which can provide the initial momentum, scale and visibility for EVs. To identify these front runners, different segments in passenger vehicle space have been assessed through a six point review framework for their early adoption success, dependence on charging infrastructure, range of models available, local manufacturing capabilities, ease of implementation and Government support.

The report further highlights the growth potential of the front runner segments in different EV penetration scenarios. For example, complete electrification of two wheelers by 2050 is expected to decrease their energy consumption by 92% and CO2 emissions by 82%. The report further outlines structural and financial challenges that are limiting the growth of EV and suggests plausible solutions which are apt for India. Specific policy interventions have been shared in the report which can trigger exponential uptake of EV market in India. Policies have been suggested to enable the EV ecosystem through deployment of charging infrastructure, demonstration of EV pilots in cities, establishing research centers and enhancing consumer awareness. It would also be important to create dedicated demand for EVs through identification of Green Zones in the cities to complete the ecosystem.

This ecosystem can be used to upscale other EV segments. Given the role of finance as a key enabler for the transition, specific financial instruments have been suggested for each segment basis their financing needs and return expectations. The report also suggests mechanisms to help reduce manufacturing cost by aggregating demand for electric vehicles as well as specific components like batteries to make these vehicle affordable for the consumer.

For instance, Green Bonds can be used to channelize climate finance for setting up EV infrastructure and Fee-bates may mobilize resources for providing rebates to EVs by levying a fee 10 ELECTRIC MOBILITY PARADIGM SHIFT CAPTURING THE OPPORTUNITIES Council for Business Sustainability CBS on polluting vehicles. Lease financing with guarantees and interest subvention is also an option for reducing the financing cost to the consumers. This report is an opportunity for all participants in the transition to electric mobility in India to identify the key drivers of growth, embrace solutions, and work towards creating the first electriconly transportation system in the World.

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