Lower oil prices support ICE vehicles
A large number of factors may impact the demand for the Electric Vehicles (EVs) for next two to three years in a significant way due to COVID-19 and as such would require continued support from the government to create consumer preference towards EVs.
This was highlighted in FICCI’s Electric Vehicle Committee on 30 April 2020 under the Chairmanship of Shekar Viswanathan, Vice Chairman & Whole Time Director, Toyota Kirloskar Motors, and Co-chairmanship of Sulajja Firodia Motwani, Founder and CEO of Kinetic Green.
The impact of COVID-19 could make consumers more risk averse to new technologies and higher priced vehicles, such as EVs, noted FICCI EV Committee.
Further, the downward trend in fuel prices would negatively affect the cost-benefit of EVs in the medium term. Adverse impact of supply chain disruptions is also more likely on EVs than the ICE (internal combustion engine) vehicles mainly because the supply chain for EVs in India is beginning to get established, vis-a-vis a long-established supply chain for ICE vehicles.
However, propensity of change in consumer behaviour may not be the same across all segments of EVs, certain segments like two wheelers and three wheelers may not be impacted in the long term.
E-Bus segment will be affected as STUs (State Transport Undertaking) may not have sufficient funds for the procurement. Additionally, factors like fall in diesel prices and concern of fund availability will further impact the demand for EV buses and this may encourage STUs to buy ICE (diesel) technology buses.
To sustain the efforts made towards electrification and to attract investment, adopting technology agnostic approach would be an appropriate pathway to achieve India’s EV targets.
Viswanathan observed, “In the recent past, the overall auto sector hasn’t been performing well and the current COVID 19 outbreak has further exacerbated the situation.
“Electric mobility, which is in the nascent stage, is also not insulated from this impact.”
To understand the ground realities, FICCI arranged for inputs from its members for feasible recommendation to the government to ensure sustainability of EV offtake in the country as well as possible measures to attract investment for EV parts manufacturing specially in the wake of global development.
“We (have) received many useful suggestions which FICCI will be recommending to Government for their consideration,” informed Viswanathan in a FICCI release on 6 May 2020.
Describing the situation as a testing time for the EV industry, Motwani pointed out that EV sector has received good support from the government in last one year, and that led to a spurt in sales of EVs.
“It is very important that the nascent sector is supported during these challenging times in view of the long-term significance of EVs for reduction of air pollution and towards fuel security,” she said.
“We will be recommending extension of FAME II scheme by at least one year to 2023. We will also put our efforts to secure support electric vehicle financing from Banks and NBFCs in a major way.
“To boost investments by EV component suppliers, focus on Make in India, and unwavering support by GOI to EV sector will be crucial. I am confident that the EV industry will sustain, recover & rebound from this demand downturn,” said Motwani. fiinews.com
