Working Paper

Near-term incentives for electrifying ride-hailing vehicles in India

Electrification Zero-emission vehicles
Clean air

This working paper examines the kinds of near-term incentives and supporting actions that are necessary to make battery electric vehicles (BEVs) a viable purchase option for drivers in Indian ride-hailing fleets. Focusing on the states of Delhi and Telangana and on four-wheelers, the authors conduct a total cost of ownership (TCO) analysis for both a baseline scenario of already adopted policies and a set of proposed and hypothetical policies. The goal is to illuminate how the Central Government of India and state governments, along with other stakeholders including cab aggregators, power utilities, and charging providers, might induce purchase decisions toward electric vehicles in ride-hailing fleets.

Results show that at current operating costs, existing incentives are insufficient to competitively position BEVs with respect to conventional models. As shown in the figure below, the bulk of the cost difference is due to the higher upfront price of BEVs and the high opportunity costs of fast charging.

Five-year TCO of BEV versus conventional vehicles on ride-hailing platforms in baseline scenario

Based on these results, the paper offers policy-relevant observations about key actions that can improve the economics for drivers. These are: (1) investments in high-speed DC fast-charging infrastructure are critical in India; (2) additional support through upfront purchase incentives is key in the near term, as electric cars in India are almost three times as expensive as conventional models; and (3) adding per-kilometer financial incentives is an appropriate and feasible way to finance the transition to BEVs in ride-hailing platforms.