Are Electric cars feasible?

Crude oil is fast running out and prices have risen steeply in the last few years. Despite a small dip recently, crude oil continues to remain firmly above the 90 dollar per barrel mark.

India imports 75% of its crude requirement leading to high Current Account Deficit. The subsidy on petroleum products like cooking gas, kerosene and diesel has put heavy burden on Government of India budget deficit. As a result, first petrol was decontrolled last year leading to a sharp increase in prices, and now diesel is being decontrolled in small steps.

This has resulted in falling car sales and inventory pile ups. It is a good time for both the Government and car manufacturer to work towards alternate fuels. Electric and hybrid cars will probably be the future for automobiles. Toyota the world’s largest automobile company started work on hybrid cars almost 2 decades ago. In 1998 when I was in Tokyo, sources in Toyota said that, already 10,000 hybrid cars of their Prius model, which runs both on electric chargeable batteries as well as petrol, were already running on Tokyo roads, which came as a big surprise for me. I am sure that today Toyota is selling 10,000 Prius cars per month, in Japan and across developed countries. This was possible because of Government subsidies on such cars in Japan as well as many other countries. From the time Toyota started making cars in India they have been requesting the Government to waive off customs duty on Prius, which can make it affordable in India, but the Government has not obliged.

Meanwhile Mahindras have developed an electric car called e20 which is also expensive. But finally the Government of India has decided to announce their National Electric Mobility Mission Plan 2020.

The PM himself has approved of no VAT, no road tax and 15% discount on the ‘on road’ price of electric cars. This has been implemented only in Delhi. But, though it amounts to a concession of almost Rs.90,000, the e20 still costs between Rs. 6 to 7 lakhs.

So the industry leaders like Hero Electric which makes electric scooters and Mahindras have asked for some more subsidy. What is now required is to exempt the amount spent on R&D for such vehicles to be set off against the tax paid by these companies.

Mahindras are already developing a hybrid version of Scorpio and market leaders Maruti are also said to be working on a hybrid car.

The price of e20 which is a small car, needs to be brought down to Rs.4 to 5 lakh before sales pick up. At the moment Government is delaying the plan inordinately and such cars are not really taking off.

I believe that the e20 can be charged by pulling an electric point in your parking lot and an overnight charging then allows it to run 200 kms at speeds of 40 to 60 kmph. This is good enough for intercity running and can be used initially for taxis. Further R&D is required to bring the charging time down o an hour or so.

Once economies of scales are achieved in selling such cars with the help of Government support, then later on the subsidy can be tapered off.

Also I feel that the sooner the Government does this, the sooner we can reduce our dependence on crude.

The future is without doubt on hybrid and electric cars even from the pollution point of view.