New Delhi: The INR 3.76-lakh crore Tata Motors, which harnessed increasing demand for electric cars to reclaim automotive market-capitalization leadership in India, has urged New Delhi to extend incentives on electric taxis for another three years and also include personal cars in the government’s flagship demand support program FAME, citing global EV leader China’s example.
Tata Motors, which has seen a near-six-fold surge in its stock price through the past five years that helped establish its domestic EV leadership credentials, wants New Delhi to help replicate an enabling environment similar to that in Beijing that has pledged to support adoption of EVs until unit sales touched at least a fifth of all new cars sold.
“Globally, major economies (China, Germany) have continued to support EV adoption with demand subsidies until achievement of at least 20% EV adoption,” Shailesh Chandra, managing director, Tata Passenger Electric Mobility and Tata Motors Passenger Vehicles, said in the letter dated March 9. “The Parliamentary Standing Committee on Industry had also recommended in 2023 that the Government broaden the scope and extend FAME by at least three more years to make the scheme more inclusive,” Chandra said in the letter, a copy of which has been seen by ET.
To be sure, FAME 2, or the second phase of support through the Faster Adoption & Manufacturing of Electric Vehicles program, comes to an end on March 31.
With sales of around 83,000 units last year, electric cars comprised 2.5% of new vehicle sales in India. China, in comparison, sold 6.68 million pure battery-powered vehicles in 2023. New Energy Vehicles (NEVs that include plug-in hybrids and battery electrics) constituted nearly a third of all vehicles sold in that country in the first two months of year. Estimates suggest China accounts for 6 of every 10 EVs sold globally.
Three More Years
To help quicker adoption of the green powertrain, Tata Motors has urged the Centre to continue supporting electric taxis with an incentive of INR 10,000/kWh battery size for the next 3 years and also include personal vehicles in future incentive schemes to enable more widespread adoption.
At present, the government extends subsidies of INR 10,000/kWh only to passenger vehicles used by taxi operators for up to 30,000 vehicles under FAME 2. But while the number of electric cabs has grown year on year to reach a cumulative 16,000 EVs, sales are still below the government’s target of 30,000 battery-powered taxis.
Chandra said in the letter there are ‘substantial funds’ left over from the initial allocation in FAME II for taxis.
“Therefore, it would be fitting that these funds are utilized to support the achievement of desired policy goals in shared four-wheeler mobility by extending the current policy allocation on FAME II,” he said.
Also Read :
“The global case studies indicate that support for about 20% EV adoption is certainly helpful. It would be good if this is the case in India as well,” Balaje Rajan, Chief Strategy Officer, Tata Passenger Electric Mobility (TPEM) said. According to him, once we reach about 20% EV adoption, the customer interest is pretty much locked in and it ensures enough scale and momentum in the market.
Tailpipe Emissions
Chandra said, with zero tailpipe emissions, electric vehicles are particularly effective in shared mobility applications, where the daily running and emissions within the urban areas are high.
However, given the higher upfront costs of EVs, demand incentives are essential for fleet owners to make the switch from traditional vehicles to EVs. “Shared mobility is a high impact use case benefitting not just the travellers in these vehicles, but also the public in highly-polluted cities such as Delhi and Mumbai,” he said.
Overall, Chandra said in a country that houses 14 of the 20 most polluted cities in the world, battery electric vehicles are the “only mature zero emissions technology available that can significantly contribute to reducing air pollution.”
He also tied EV adoption to achieving broader climate goals.
“With continued FAME subsidies and supportive policies, India can fast track EV adoption to reduce the burden of urban air pollution, and achieve the nation’s net zero, energy independence and economic growth objectives,” he added.
Tata Motors currently dominates the local market for electric vehicles with a share of more than 70%. The company sells four EVs in the personal car segment, hatchback Tiago, sedan Tigor and SUV Punch and Nexon.
The company plans to expand its portfolio in this category with the Harrier EV Curvv EV over the next few months. Electric vehicles already account for 14-15% of sales at Tata Motors, which will go up to 25% by 2027 and 50% by the end of the decade.
