A Layman's Guide To India's Latest E-Mobility Scheme Costing Nearly Rs 11,000 Crore

However, before diving into the nitty-gritty of what has and hasn’t been addressed, it is important to understand what the new scheme is.

PM E-Drive is in many ways a scheme designed to replace the earlier FAME.

Like its earlier avatar, it is a scheme to promote Electric Vehicles (EVs) in the country. In a nutshell, the scheme will support electric two-wheelers, three-wheelers, and buses.

Besides, hybrid and electric ambulances, as well as electric trucks and buses, will also be incentivised by this scheme.

The total outlay for the scheme Rs 10,900 crore will be spread out over two years.

More Charging Stations To Address Range Anxiety 

The big highlight of the scheme, however, is how it tackles a major worry: Range anxiety.

Range anxiety, for the uninitiated, is a common concern among EV owners, who fear that their car battery may run out before reaching a destination or finding a charging station. To address this, the government is allocating Rs 2,000 crore, which will ensure the installations of 72,300 public charging stations across the country.

Of the 72,300 chargers--22,100 fast chargers are for electric four-wheelers, 1,800 for electric buses, and 48,400 for electric two and three-wheelers.

The scheme that will support 72,300 electric vehicle public charging stations will be nearly a five-fold increase from the current 12,146 already installed charging stations. 

Besides this, testing agencies have also been given a boost of Rs 780 crore. This is important because these agencies evaluate and certify vehicles and their components to ensure they meet safety, performance, and environmental standards.

Weaning Users Away From ICE Vehicles

Testing agencies will crack down on high-emission Internal Combustion Engine (ICE) vehicles and nudge consumers away from their petrol and diesel guzzlers.

The government’s plan is to supercharge the Ministry of Heavy Industries (MHI) testing agencies, equipping them to handle cutting-edge technologies and drive the shift toward greener and more sustainable mobility solutions.

To make EVs appear more lucrative, the government has set aside Rs 2,679 crore in subsidies and incentives. This allocation will help make 24.79 lakh electric two-wheelers and 3.16 lakh electric three-wheelers, along with other new types of EVs, affordable.

Whereas, Rs 4,391 crores have been allocated to promote the deployment of 14,028 electric buses on the road. However, priority will be given to the buses that are replacing old ones. 

Aside from this, Rs 500 crore each has been allocated for Electric trucks and Electric ambulances.

Electric Four Wheelers' Left Out

However, the big drawback of this scheme is that there are no subsidies for four-wheeler vehicles. So the big question in the minds of those who invested in EV cars is what next?

The penetration rate for electric four-wheelers has been subdued despite the government’s erstwhile FAME subsidy. That said, there is still a silver lining. Union Minister Nitin Gadkari was recently quoted saying that in two years the EVs won’t need a subsidy owing to battery costs coming down. 

Gadkari mentioned that the price of lithium-ion batteries which were once US$150 per kilowatt hour is now around US$108 to US$110 per kilowatt hour. He's confident this will eventually drop to US$100.

At the same time, the EV charging infrastructural push outlined above can be the key to making four-wheeled EVs more palatable for car buyers. 

Rationale For Subsidy Behind Electric Two and Three-Wheeler 

The scheme seems to have recognised a target consumer for electric vehicles. Given the way electric three-wheeler and electric two-wheeler vehicles have seen a higher share of sales in the last couple of years, mostly driven by app-based gig operators, the new wave of subsidies is aimed at the delivery fleets that service India's urban consumers.
 
According to data from the Vahan Dashboard analysed by The Secretariat, the number of electric two-wheelers registered in 2022 was 6.31 lakh. This figure increased by 36 per cent in 2023, reaching 8.60 lakh. Similarly, the number of electric three-wheelers registered in 2022 was 3.50 lakh, which increased by 66 per cent to reach 5.83 lakh.

In contrast, the electric four-wheeler market experienced subdued growth not because of the percentage increase but because of the total units sold. Though there was a 120 per cent increase from 33,227 in 2022 to 73,308 in 2023, the number of registered units was far lower compared to electric two-wheelers and electric three-wheelers.

The government has recognised the market demand for the vehicle type and prioritised the sector where there is a demand. 

Why Buses, Trucks, And Ambulance?

The government's push to electrify buses is an attempt to 'green' the country's public transport system. From a sustainability lens, this will lay a healthy foundation for India's journey towards sustainability.    

Not only buses, electric trucks, and ambulances have also been given a boost.

Towards Mobility Goals

In all, the government’s effort with the new scheme can make a significant difference in the transport sector’s contribution to pollution, and changes the roadmap to achieve sustainable mobility goals. 

However, as they say, "the proof of the pudding is in the eating". To contextualise, this would mean that only time will tell how the new scheme will fare and how consumers and manufacturers will actually benefit from it.