Thursday, July 18, 2024


According to a recent Financial Times report, an ambitious Indian government programme to encourage the widespread adoption of electric vehicles — inevitably majoring on powered two-wheelers which dominate the country’s roads  — has backfired badly.

Shamed by the world’s worst air pollution and total dependence on imported oil, India was an obvious candidate to jump on the EV bandwagon. So the government slashed sales tax on EVs and chargers, respectively down from 12% and 18% to 5%. And it subsequently introduced a subsidy package for manfacturers worth more than £1bn. The devil was in the detail, though, because these tax breaks and subsidies came with a requirement that about half of all EV components must be sourced in India, forcing manufacturers to cease production while they hunted for local suppliers.

Ather Energy, an e-scooter producer part-owned by Hero MotoCorp (India’s biggest motorcycle and scooter manufacturer), had to stop sales altogether in April and May while it refitted already-complete inventory with indigenously-made wheel rims and other parts.

Sohinder Gill, chief executive of Hero MotoCorp off-shoot Hero Electric, told the FT that EV sales had slumped since the government intervention programme was launched. “Instead of catalysing, it shot the market down in a brutal way,” Gill said. “We have taken a big beating. What is happening on the ground is very negligible. We have had a deteriorating trend for EVs over the past few months.”        

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