Why Incentives Alone Can't Drive Mass EV Adoption

Broadly, there have been two models, and now a third is emerging. 

The first model focuses on attracting manufacturing investment. States such as Tamil Nadu, Telangana, Karnataka, Gujarat and Maharashtra have designed their EV policies to attract manufacturers and build a production ecosystem. 

The second model is about promoting EV adoption and usage. Delhi has been the best example of this approach, using incentives and charging infrastructure to encourage consumers to shift to EVs. 

Now, a third model is emerging through Delhi's proposed new EV policy. Beyond promoting EVs, it also seeks to restrict internal combustion engine [ICE] vehicles in certain segments. Rather than relying only on incentives, it uses regulatory measures to accelerate EV adoption.

Delhi is a unique case. It has limited land and does not have a significant manufacturing base because of its geography and pollution concerns. So, unlike industrial states, Delhi cannot realistically compete to attract large EV factories. 

Instead, Delhi's policy objective is to reduce air pollution by increasing the use of EVs. States like Tamil Nadu, Gujarat, Telangana and Maharashtra are primarily trying to attract investments in EV manufacturing, whereas Delhi is focused on increasing EV adoption.

These states are looking at the EV opportunity from a broader economic perspective. The central government's push has been to encourage domestic manufacturing, and states are competing to attract factories and investments. 

The vehicles manufactured there will ultimately be sold across India, and many will also be exported. Since EV manufacturing is still at an early stage, states see this as an opportunity to attract investment, build industrial capacity and become manufacturing hubs.

It depends on the state's priorities. Manufacturing creates direct jobs, attracts ancillary industries, strengthens the supply chain and generates additional investment. A large EV plant can create an entire ecosystem of component manufacturers and suppliers. 

From a state's perspective, that means higher investment, more employment and stronger economic growth.

Whenever a new technology is introduced, incentives are necessary because the technology is expensive and consumers are unfamiliar with it.

However, our experience shows that incentives alone do not create mass adoption. They can help achieve the initial 2-5% adoption, but they do not drive large-scale growth.

Scale comes through regulation. This is why Delhi's proposed EV policy is significant. Since transport emissions are a major contributor to Delhi's air pollution, the state is considering measures such as phasing out registrations of certain ICE two-wheelers, three-wheelers and small four-wheelers. The objective is to create large-scale EV adoption through regulatory action.

Globally, we have seen the same pattern: incentives help with early adoption, but regulations are what drive widespread adoption.

It is still difficult to make a direct comparison. Incentives can certainly help achieve early adoption of around 3-5%. 

If you compare EV sales across states, the picture can be misleading. For example, Uttar Pradesh records high EV registrations largely because of the large number of electric rickshaws, which skews the data. Therefore, simple sales comparisons do not necessarily indicate which policy model is more successful.

If you remove e-rickshaws from the data, states like Maharashtra and Delhi have performed well. Kerala has also seen good progress.

That said, it's a mixed picture because performance depends on the vehicle segment you are looking at. More importantly, even in the best-performing states, EV penetration is still in single digits. That's why we need measures that can drive scale, and Delhi's proposed EV policy is attempting to do exactly that.

Unfortunately, India does not have a national EV policy. We have programmes such as PM E-DRIVE and PM E-BUS SEWA, but those are incentive schemes, not a comprehensive policy. We also have the National Urban Transport Policy, but there is no dedicated national EV policy.

In fact, India doesn't even have a national target for EV adoption. We don't have a clearly defined goal for what percentage of vehicle sales should be electric over the next five, 10 or 20 years.

Whether it's a formal policy or a national EV target, we need one. Clear targets help shape programmes, guide investments and provide certainty to industry.

One of the biggest barriers is the lack of strong regulatory signals. 

Countries that have achieved large-scale EV adoption typically have clear national EV targets and defined timelines for phasing out ICE vehicles.  

Clear long-term regulations provide certainty to both consumers and manufacturers, which is essential for mass EV adoption. 

Regulation sends a strong signal. Many European countries have announced deadlines after which new ICE vehicles will no longer be registered. Once such a regulation is in place, consumers and manufacturers know the direction of the market. 

For consumers, however, two additional factors are critical. First, EV prices need to come down. That happens through greater competition, and competition increases as demand grows. 

Second, charging infrastructure must improve. While much attention is given to public charging stations, private charging is equally important. People living in apartment complexes and group housing societies should be able to charge their vehicles where they park. 

Countries such as Norway have introduced a ‘right to charge’, which gives EV owners the legal right to install charging facilities at their designated parking spaces. Resident welfare associations (RWAs) cannot prevent them from doing so. 

This is important because I've been using an EV for the past four years and am still struggling to get permission from my RWA to install a charger. Their argument is that there is no regulation requiring them to allow it. A similar ‘right to charge’ provision in India could significantly accelerate EV adoption.

I agree, but the real question is: when does infrastructure get built? Infrastructure follows demand. 

Take my own housing society. Today, my RWA is reluctant to approve charging infrastructure. But the moment more residents—including decision-makers in the society—buy EVs, charging facilities will be installed because the demand will exist. 

Scale creates pressure for infrastructure investment. So, the key question is: How do you create that scale? My view is that regulation is what creates it. 

China's new energy-vehicle policy dramatically increased EV adoption. Norway, where EVs account for around 97% of new car sales, achieved that by setting a clear timeline for ending ICE vehicle registrations. Once the market reached scale, the supporting ecosystem developed rapidly.

If you're planning a long-distance trip in an EV, you do need to plan your charging stops. But the biggest concern about range anxiety usually comes from people who don't own an EV. 

People who actually drive EVs learn how to plan their journeys. I've driven an EV for four years, covered around 100,000 km, including 1,000-km road trips, and I've never run out of charge. 

There are also many misconceptions about performance. In fact, EVs deliver instant torque, which is one of their biggest advantages. You'll often see vehicles like the Tata Nexon EV accelerating faster than much more expensive premium cars over short distances because electric motors provide immediate torque. 

Most of these misconceptions come from people who have never owned an EV. 

In my experience, once people switch to an EV, very few want to go back to an ICE vehicle. EVs offer smooth acceleration, no engine vibration, very little noise and a much quieter cabin, making long-distance driving more comfortable. 

Another important point is charging. With a petrol or diesel vehicle, you have to visit a fuel station regularly. With an EV, if you have a home charger connected to a standard 15-16 amp socket, around 90% of your charging happens at home, so you rarely need public charging in day-to-day use.

It's a mixed picture. The biggest improvements have been along highway corridors. Some routes are now well served, while others still have significant gaps. 

For example, the old Delhi-Jaipur highway has a very good charging infrastructure. 

In Rajasthan, many major roadside restaurants and dhabas have installed chargers. The Delhi-Chandigarh corridor is also well covered. 

However, the Yamuna Expressway still lacks adequate charging infrastructure. 

Generally, older highways tend to have better charging availability because businesses such as dhabas and roadside establishments have installed chargers. Newer access-controlled expressways still need more charging stations.