Page 25 - The Insurance Times August 2022

Major roadblocks When it comes to transport, new technologies just keep
popping up around the world. These alternative technologies
There are many roadblocks that are giving Indian customers
in transport are mainly based around electric vehicles with
the creeps and preventing the widespread adoption of
many companies jumping on the bandwagon to get some
electric vehicles. India would need 400,000 charging stations
traction before the industry gets a radical shift away from
by 2026. The cost of a battery accounts for 40-50% of the
traditional fossil fuels. The electric vehicle adoption rate in
overall production cost. Although sales of these electric
India is less than 1% according to a McKinsey & Company
vehicles are increasing, there are several issues on the
report. According to Bloomberg, in the six years leading up
ground. EVs are more costly than ICEs and have a much
to October 2019, India has barely sold more than 8,000
larger initial investment. The price difference between an
electric cars. If compared to countries like China these sales
electric car and a comparable ICE vehicle can go up to as
figures are achieved in less than 2 days. The Indian EV
high as three to four times, making EVs a less appealing
industry being in its nascent stages does not have an
alternative for the ordinary Indian buyer.
established market leader in all vehicle types.
Electric vehicles are expensive in India because the batteries
Production-linked incentive schemes
used in EVs alone form around 30% to 50% of the cost of
In May 2021, the government rolled out a Production-Linked
EVs. These batteries are very expensive, hence increasing
Incentive Scheme (PLI) for ACC Battery Storage
the cost of EVs. Another major factor for Electric Cars being
Manufacturing, which will incentivize the domestic
expensive in India is because this industry is not able to
production of such batteries and reduce the dependence on
utilize economies of large scale production. When the
imports. This will support the EV industry with the requisite
demand increases and EVs will be manufactured in high
infrastructure and will significantly cause a reduction in cost
volumes, we can expect that the prices might reduce.
of EVs. On September 15, 2021, the government approved
a PLI Scheme for the automobile and drone industry, which
Electric vehicle industry:
intends to incentivize high value advanced automotive
The Indian automotive industry is the fifth largest in the
technology vehicles and products, including 'green
world and is slated to be the third largest by 2030. Catering
automotive manufacturing. The PLI Scheme for the auto
to a vast domestic market, reliance on the conventional sector is open to existing automotive companies as well as
modes of fuel intensive mobility will not be sustainable. In new investors who are currently not in the automobile or
an effort to address this, federal policymakers are auto component manufacturing business. The scheme has
developing a mobility option that is "Shared, Connected, and
two components:
Electric" and have projected an ambitious target of
i) Champion OEM Incentive Scheme: This is a 'sales value
achieving 100 percent electrification by 2030. The EV market
linked' scheme, applicable on battery electric vehicles,
in India will be a US$206 billion opportunity if India maintains
and hydrogen fuel cell vehicles of all segments.
steady progress to meet its ambitious 2030 target. This
ii) Component Champion Incentive Scheme: This is a 'sales
would require a cumulative investment of over US$180
value linked' scheme, applicable on advanced
billion in vehicle production and charging infrastructure.
automotive technology components of vehicles,
completely knocked down (CKD)/ semi knocked down
(SKD) kits, vehicle aggregates of 2-wheelers, 3-wheelers,
passenger vehicles, commercial vehicles, and tractors
etc.
One-stop platform- 'e-AMRIT' portal
India rolled out the website e-AMRIT - https://www.e-
amrit.niti.gov.in/ - at the COP26 Summit in Glasgow, which
will function as a one-stop destination for all information on
electric vehicles. It addresses key concerns about the
adoption of EVs and their purchase - such as charging facility
locations and EV financing options as well as information
about investment opportunities, government policies, and
available subsidies for drivers and manufacturers

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