Even with the existing policies, 60 per cent of the cars sold in the year 2030 in the world’s top three markets – the United States, China and Europe – will be electric, said Fatih Birol, the executive director of the International Energy Agency, the influential Paris-based outfit, while presenting the Global EV Outlook 2023.
This is expected to help fight off some of the adverse impact of carbon-led climate change and reduce oil demand. The fly in the ointment is the popularity of sports utility vehicles (SUVs), which continues to rise regardless of whether these run on fossil fuels or batteries. The rise in SUV sales last year is believed to have undone the gains from sales of electric vehicles.
It should therefore be heartening to note that in India, one of the countries most susceptible to climate change, two-wheelers — small and light as they are — have led the march of electric vehicles, with a raft of start-ups coming in and customers seeing easier adaptability than for electric cars.
Now that ride runs into an uneven patch. Call it growth pangs.
Story of the week: Shock to electric
Effective Thursday, the government once again reduced the subsidy on electric vehicles under the FAME-II scheme, which is meant to foster faster manufacturing and adoption of electric and hybrid vehicles. The latest tweak reduces the incentive on electric two-wheelers (e2Ws) to a maximum of Rs 22,500 from Rs 60,000 apiece, resulting in a 20 per cent increase in the average price of an e2W, which ranges from Rs 80,000 to Rs 1.5 lakh.
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This is making people like Vijayan Sundaresan, who navigates the streets of Chennai every day to supply corn puffs to mom-and-pop shops, have second thoughts about buying an e2W. He is likely to continue flogging his trusty old Splendor for some more time.
Unsurprisingly, industry estimates say sales of registered e2Ws may clock only half of the 2.3 million target for this financial year.
The makers of e2Ws are working on measures to reduce costs, such as increasing prices, changing the size of the batteries, and doing away with some of the features. Meanwhile, the new prices are giving shocks to prospective buyers.
EV subsidy, meant to help in the development of a local EV ecosystem and supply chain, is an issue much mired in debate and controversy. But some believe it has made large parts of the industry dependent on government policy. As a case in point, the retail market share and sales of electric vehicles, after a surge in 2022, began declining in January 2023. Industry players attributed the dip to the halt of FAME-II subsidies, rising cost of EVs, and supply chain constraints.
Rajiv Bajaj, the outspoken head of Bajaj Auto — the storied maker of scooters, morphed into a motorcycle powerhouse, now dabbling in electric vehicles — believes the FAME-II subsidy is a flawed strategy because it is not sustainable.
The measures to trim subsidies have coincided with a government investigation into their misuse and directives to enhance battery standards in the wake of incidents of e2W fires last summer.
With only 10 months left before the deadline for FAME-II ends, the government has sponsored only 41 per cent of the target of more than 1.5 million EVs since the launch of the scheme in March 2019. As the government plans no further extension of the scheme beyond March 2024, the task is to achieve the unfinished target of subsidising 914,707 EVs.
In other news…
India’s GDP grew 6.1 per cent in the March quarter, beating analysts’ expectations. A poll of 56 economists by Reuters last week had pegged the fourth quarter growth at 5%.
The performance in the March quarter — boosted by a surprisingly high expansion in manufacturing and construction — led to an upward revision in overall economic growth in 2022-23 to 7.2 per cent from the 7 per cent estimated earlier.
How is corporate India looking at the GDP numbers? “I think animal spirits are already out in India Inc,” Sunil Mittal, Bharti Enterprises founder and chairman, told us.
The RBI expects the Indian economy to expand 6.5 per cent this financial year (2023-24). Though the projection is significantly lower than in last year, attaining even this level of growth will not be easy because of a variety of factors, said our Edit.
The Securities and Exchange Board of India, the stock market regulator, has proposed stricter disclosure norms for certain foreign portfolio investors to bring in more transparency and trust against the backdrop of the Adani-Hindenburg saga.
Tech that: Word from the world of technology and start-ups
As the so-called funding winter for India’s start-ups lingers on, the venture capital order in the country is getting upended. Foreign firms such as Tiger Global, Sequoia, SoftBank, Accel, and Y Combinator have nearly shut their taps. This year, foreign investment in India’s start-ups has plummeted 72 per cent so far. The number of deals fell from 852 to 241.
Watch it: From The Morning Show
The Indian Premier League became the country’s first unicorn in 2008, its year of inception. This year, its value crossed $10 billion, making it a ‘decacorn’, or 10 times a unicorn. Has it become India’s Super Bowl? Find out here.
What is Suveen obsessing over?
If people try to hold Elon Musk accountable to his claims, the Bites won’t hold it against them. But when it comes to being large-hearted, Musk is no Weekend Bites.
In the run-up to his chaotic purchase of Twitter last year, Musk posited himself as, among other things, a “free speech absolutist”. It seems he wanted to buy the social media platform to bolster free speech on it.
Naturally, it is a matter of interest to see that the social network is NOT turning down too many request from countries to restrict or censor stuff. But when Matthew Yglesias, a Bloomberg columnist, pointed this out on Twitter (free speech is allowed thus far) citing an article from El Pais, a Spanish-language daily from Spain, Musk did not take kindly to it.
Putting social decorum aside, Musk called Yglesias a “numbskull”, an odd choice of word because it is an old-fashioned expression to describe someone as very stupid. “Please point out,” replied Musk, “where we had an actual choice and we will reverse it”.
Yglesias was not overawed by the famed entrepreneur. “Look, I’m not the one who bought Twitter amidst a blaze of proclamations about free speech principles. Obviously you’re within your rights to run your business however you want,” Yglesias replied.
Musk has often come under fire since his purchase of Twitter for not living up to his “free speech absolutist” proclamation. And he has tried to counter the charges with pragmatism, saying he must comply with the laws of the land.
In a BBC interview in April, he said: “The rules in India for what can appear on social media are quite strict, and we can’t go beyond the laws of a country... If we have a choice of either our people go to prison or we comply with the laws, we will comply with the laws.”
The Bites is with Musk on this. This is the pragmatic way to run a business. But we cannot help wondering how compliant pragmatism might be with absolutism.
This is Suveen signing off. Please send comments, news, or views about anything — from feature-less EVs to true free-speech absolutists — to email@example.com.
(Suveen Sinha is Chief Content Editor at Business Standard)