Why Incentivising Aggregators May Not Result In An All-EV-Cab-Fleet By 2030 In Delhi

Delhi has earned a dubious reputation for being amongst the most polluted major cities on the planet and was even judged the most polluted capital worldwide for four years in a row by IQAir, an air quality information platform. Come winter, the air pollution gets so bad that schools are often closed as the government scrambles to control the pollutants. One such initiative has been to encourage people to shift from carbon monoxide-emitting fossil fuel vehicles to their electric alternatives.  

Delhi transport minister Kailash Gahlot announced the Electric Vehicles (EV) Policy 2.0 last month, setting a deadline for cab aggregators and commercial vehicles to switch to EVs by 2030. The policy, which is in its final stage of approval and adoption, is expected to boost the adoption of EVs in the city by offering incentives for converting fossil fuel-powered vehicles into electric mode through retrofitting. However, it is more challenging than it sounds.  

Amit Lakhotia, founder and CEO at Park+, anticipates this shift to unfold sequentially, starting with converting the 2-wheeler category to EVs, followed by light commercial vehicles and, subsequently, personal vehicles. The existing vehicle scrappage policy will need to evolve at grassroots-level changes.  

"As an EV charger installer, we endeavour to develop EV zones which mirror the current petrol pump setup- where EV users (2W, 3W, 4W and commercial EV) can charge their vehicles, take an F&B break, use clean washrooms, etc. With our deep partnerships with real estate players and auto OEMS, we are optimally positioned to identify EV hotspots and cater to our users," he said, emphasising that Delhi NCR has the potential to emerge as an EV leader at a national level.  

But not everyone shares his optimism and with good reason.  

The Road Ahead for EV Adoption in Delhi 

According to a statement to Hindustan Times, Delhi transport minister Kailash Gahlot had said that 11 per cent of all vehicles sold in Delhi currently comprise EVs. However, just 2,000 EV charging points are spread across 42.7 square km of the city's circumference.

The lack of EV charging infrastructure, the cost of shifting to an EV and the dismal incentive for doing so make the 2030 goal seems like a far-fetched mission. 

Since encouraging commercial vehicles to consider moving to EVs necessitates significant infrastructure development, the government will have to work doubly hard to collaborate with charging infrastructure providers and establish a strong charging network throughout the city.

When it comes to individual choice, a Cars24 report states that despite the government's push to get people to shift to electric vehicles, 87 per cent of car buyers opted for petrol vehicles during the festive months. The inclination towards petrol cars was primarily driven by their lower initial costs and diminished service and maintenance expenses. Additionally, regulations allow petrol cars to remain on the road for 15 years, enjoying a five-year longer extension compared to their diesel counterparts, adding an extra layer of appeal to their ownership.

Infrastructure Hurdles: Navigating the EV Charging Landscape 

Fortunately, The Indian government has implemented various initiatives to encourage electric mobility, focusing on developing charging infrastructure for EVs. Earlier this year, the Ministry of Power clarified by stating that charging EV batteries through charging stations does not necessitate any licensing. This comes two years after it collaborated with the Ministry of Road Transport and Highways, the Ministry of Heavy Industries, and NITI Aayog to launch the 'Go Electric' nationwide initiative to educate the general public about the advantages of EVs. 

The Bureau of Energy Efficiency (BEE) also formulated action plans for nine major cities to facilitate the installation of Public Charging Stations (PCS). Initial estimates indicate a target of 46,397 PCS in these cities by the year 2030, which includes Delhi. 

The existing EV infrastructure in Delhi is in its early stages of development, requiring efforts on multiple fronts. This includes the identification of suitable locations for EV chargers, the installation of appropriate charging ports, the establishment of competitive charging rates, and the enhancement of the electrical grid to handle the increased demand effectively. 

These efforts notwithstanding, there is great reluctance amongst communities, including retail stores, small business owners and even Residential Welfare Associations (RWAs), to provide public charging stations at their premises. Nimish Trivedi, co-founder and CEO of Evera Cabs, attributes this to the financial commitment required for implementing and maintaining it. 

"Investments in charging stations at such strategic locations, such as fuel stations and popular destinations, must be expedited. Ongoing communication with authorities and proactive planning will be essential to address potential challenges. While the current infrastructure may be insufficient, a concerted push toward expansion and accessibility will contribute to the viability of an all-EV fleet, aligning with Delhi's commitment to sustainable transportation." he stated. 

Financial Considerations: Retrofitting Challenges and Costs 

Another reason why the 2030 goal appears to be a mirage is the high cost of changing an internal combustion engine (ICE) into an electric one. A PTI report quoted Minister Gahlot stating that converting a Maruti Gypsy requires an investment of approximately Rs 5 lakh to Rs 6 lakh.  

According to a Cars24 blog post, DIY conversion kits can cost between Rs 2 lakh to Rs 5 lakh, while professionally fitted conversion kits fall into the price range of Rs 4 lakh to Rs 10 lakh, depending on the intricacy and customisation. These figures underline that such a transition can burn a hole in the pocket and make it an unviable proposition for most vehicle owners, especially those plying commercial cars.  

To overcome this issue, the Delhi government currently offers various subsidies for EV purchases, with incentives ranging from up to Rs 30,000 for two-wheelers, Rs 5,500 for e-cycles, and up to Rs 30,000 for e-rickshaws and light commercial vehicles. Other non-fiscal incentives include road-tax waivers, issuance of green registration plates for EVs, exemptions from license fees, and streamlining the approval process through single-window clearances. While these are welcome moves, it does not address the issue of retrofitting existing ICE vehicles that are already on the roads. 

Rohit Pandit, chairman and managing director at Shuzlan Energy said that achieving an all-EV fleet in Delhi by 2030 is a formidable goal that demands collaborative efforts. Currently, the government's subsidies largely benefit EV manufacturers, and extending similar support to Charge Point Operators (CPOs) involved in building charging infrastructure could catalyse the transition further. 

"Cab aggregators are navigating the prospect of an all-EV fleet by 2030 with a mix of anticipation and financial considerations. While incentives for EV manufacturers exist, providing similar support or incentives to CPOs building charging infrastructure would bolster the feasibility of this transition," he said.  

The nub of the matter is that most cab aggregators are concerned about the costs involved in retrofitting their current vehicles to adhere to the EV policy, which many say is not skewed in their direction financially.  

Perhaps word of this disappointment reached the upper echelons of the powers that be. Minister Gahlot said this week that the Delhi EV policy 2.0 will likely be finalised in a month, two days after the Delhi Cabinet approved the extension of the current framework till December 31. He claimed that work on the framework is in the final stage, and feedback from various quarters is being reviewed before it is rolled out.  

Industry stakeholders hope the EV Policy 2.0 provides incentives for retrofitting ICE vehicles to electric mode, which will fast-track the adoption of EVs, especially amongst commercial vehicles and aggregators. And if this happens, hopefully by 2030, Delhi can cast away the crown of the most polluted city of the country.