Maharashtra ups the ante on electrifying road transport

(Times of India, by Anup Bandivadekar and Shikha Rokadiya, 11/26/2021)

Maharashtra recently revamped its electric vehicle (EV) policy and packed it with a bundle of attractive incentives, aiming at electrifying 10% of new vehicle registrations by 2025, with a focus on urban areas of Mumbai, Pune, Nagpur, Nashik, and Aurangabad. The policy covers all major vehicle segments while prioritizing shared and public transport, two-wheelers, and three-wheelers. The policy rightly identifies upfront cost parity, model availability, charging infrastructure, and low consumer awareness as key uptake barriers and checks many right boxes in addressing these issues head-on. A recent research indicates that without any incentives, electric two-wheelers may not match upfront prices of conventional petrol two- wheelers for another 8-10 years. With petrol prices near Rs 100 per liter, electric two-wheelers are already becoming cheaper to own and operate over their useful lifetime, but consumers may still balk at the higher upfront cost of an electric vehicle. The recently revised incentives offered by the Central government (FAME-II) along with preferential GST rates bring upfront cost-parity for electric two-wheelers closer to 2025. Maharashtra’s new EV policy generously tops up these central government incentives to tilt the case clearly in favour of electric models. A 3-kWh electric two-wheeler purchased in 2021 is eligible for a demand incentive of Rs10,000 along with an “early bird” discount of Rs15,000. For electric two-wheelers purchased against scrapped Internal Combustion Engine (ICE) models, the policy offers additional scrappage incentives of up to Rs 14,000 for consumers. Taken together, Maharashtra’s direct incentive package for two-wheelers nearly doubles the FAME-II incentives offered by the central government. This can make an electric scooter nearly 15% cheaper to purchase than a petrol scooter. Even after the early-bird discount disappears from January 2022, electric two-wheelers in Maharashtra will continue to be attractive to purchase compared to their petrol counterparts because the policy also offers a full road tax waiver for electric vehicles. With the early bird discount, Maharashtra’s demand incentive package compares most favorably today amongst state EV policies in India. For example, while both Delhi and Gujarat offer generous demand incentives to electric models, a 3 kWh scooter purchased before the end of this year in Maharashtra can be INR 14,000 cheaper than Delhi, while about Rs 20,000 cheaper than in Gujarat.