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Power Ministry Proposes to Central Government Departments to Supply E-Vehicles

The Power Ministry has offered to supply electric cars to the central government departments that can either be leased or purchased. The move is expected to raise the demand for electric vehicles by 5 lakhs and will be a big boost for major automobile players.

India: The Ministry of Power has proposed to supply electric cars to different Central government departments that can either lease or purchase these vehicles. The move is expected to raise the demand for electric vehicles by approximately 5 lakhs. The anticipated move will also propel the demand for key automobile players like Tata Motors and Mahindra & Mahindra, who have already bagged orders to supply e-vehicles. Global firms like Nissan and China’s BYD are also potential gainers.

The Energy Efficiency Services (EESL) has offered to provide new electric passenger cars on lease to government departments, PSUs and agencies for a period of six years. The company has also offered to acquire cars for the ministries at Rs. 11.8 lakh per car, including taxes. As per the lease model, chauffeur-driven e-cars will be provided to the ministers for 26 days in a month, for eight hours per day. A few of the government departments have claimed that the cost of Rs. 40,000 per car for a month is expensive.

EESL has also demanded ₹260 per extra working hour, but Bureaucrats from different departments have said that work hours stretch beyond regular timings. The ministries will also have to pay Rs. 3 per km for travel beyond 80 km, while also paying for the electricity for charging.

The Managing Director for EESL in an interview to a leading daily said that power ministry is considering accommodating a few changes in the scheme. These concerns raised are being allied according to the requirement. The Capital cost for electric cars is 40% higher than the corresponding cost of petrol or diesel cars. The move is in line with EESL’s attempt to start electric mobility in India without any government subsidy.

EESL is expected to hire agencies which shall provide drivers, a 12-hour customer service, emergency road assistance along with maintenance and repair of the vehicles. However, if the government departments choose to take a commercial e-vehicle on lease, they will have to bear the parking costs, toll taxes and other duties.

The departments can choose to register the vehicles in their names and at the end of the lease period, they will have the right to keep the vehicles. EESL will aid the departments in setting up charging stations for the vehicles while the ministries will have to bear the costs and ensure the land and parking space. Carless drivers are being offered at ₹20,000 per month.

According to TechSci Research, the initiative taken up by EESL and the Power Ministry would kick-start the government’s target of electric mobility. The move is in line with EESL’s attempt to start electric mobility in India without any government subsidy. The electric mobility market in India is expected to witness robust growth in the coming years due to the increasing number of government initiatives to encourage adoption of cleaner vehicles, demand for electric vehicles in the country is anticipated to grow in the future. Under the Government initiative like Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME), the government is has set a target of achieving 100% electric public transport vehicles by 2023, which will act as a driver for the growth of electric small cars and passenger cars in the country.

According to the recently published report by TechSci Research, India Electric Vehicle Market, By Vehicle Type (Three-Wheeler, Two-Wheeler, Passenger Car & Bus), By Drivetrain Technology (Battery Electric Vehicle Vs. Plug-in Electric Vehicle), Competition Forecast & Opportunities, FY2013 – FY2023”, India electric vehicle market is projected to grow at a CAGR of over 37%, during FY2018-FY2023. Robust market growth is anticipated on account of rising number of government initiatives such as incentive schemes to encourage adoption of environment-friendly electric vehicles, growing consumer inclination towards electric vehicles, concerns over harmful effects of air pollution, and huge investments by various OEMs for developing more affordable and premium electric vehicles in the coming years.

According to the recently published report by TechSci Research, Global Small Electric Vehicle Market By Technology (Hybrid Electric Vehicle, Plug-In Hybrid Electric Vehicle, Battery Electric Vehicle), By Battery Type, By Geography, Competition Forecast & Opportunities, 2022, Global small electric vehicle market stood at around $ 6 billion in 2016, and is forecast to grow at a CAGR of 23% during 2017 – 2022, to reach $ 20.7 billion, on account of increasing consumer inclination towards electric passenger cars coupled with declining prices of electric vehicles. Moreover, the boost in demand for small electric vehicles can be attributed to favorable government policies and continuing surge in R&D investments by several OEMs to develop premium quality and affordable small electric vehicles. All the above stated factors along with growing penetration of small electric vehicles in developing economies are anticipated to positively impact the market over the course of next five years.

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