India is giving out RM 12.4k to EV buyers - Tata and Mahindra immediate beneficiaries

India’s growing EV industry is rapidly gaining popularity as up to 15 states have either proposed or adopted EV policies to accelerate the adoption of EV ownership.

These state-driven policies complement national- and city-level policies, especially in automotive manufacturing hubs such as Haryana, Maharashtra, Tamil Nadu, and the national capital, Delhi.

Of these states, Maharashtra, which is India’s second-biggest car market and third-largest manufacturing hub, has introduced updated EV policies as it aims for 10 percent of all new vehicle registrations (inclusive passenger vehicles, two- and three-wheelers) to be EVs by 2025.

To do this, the 'Maharashtra EV Policy 2021' plans to drawdown on USD 125 million of state-sanctioned funds to offer greater incentives to early EV adopters, build its EV charging infrastructure by adding up to 2,500 charging stations.

Also read: Are electric vehicles (EV) truly cleaner than combustion-engine cars?

Under the new policies – EV owners receive a waiver on road tax and registration fees, as well as an ‘early-bird' incentive that further deducts approximately USD 3,000 (about RM 12,400) from the vehicle price for purchases made before 31st December 2021.

The earliest benefactors of these incentives will be buyers of Tata’s Nexon EV and Tigor EV which currently lead the passenger car EV segment with a 70 percent market share.

Also read:How many EVs are there on Malaysia roads? Slightly under 500, which brand leads?

In addition, Maharashtra also wants to further electrify 25 percent of all public transport and last-mile delivery vehicles within the next four years.

The new EV policy also incentivises the production of EV components and the setting up of battery manufacturing facilities. 

As both Mahindra and Tata are based in Maharashtra, these new incentives should further promote the expansion of their EV production and engineering capacities.

On a national level, in 2019, the Indian government approved a USD 1.4 billion EV incentive package that provides direct incentives on the purchase of EVs and will also support the deployment of charging infrastructure (USD 136 million allocated)

Under the “Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II)” policy, the government subsidises INR 10,000 (RM 563) for each kilowatt-hour (kWh) of battery capacity in the vehicle, estimated to be 50 percent of the battery cost. To qualify, cars have to be priced at less than INR 1 million (~RM 87.8k).

Current vehicles that qualify for the FAME II incentives include the Tata Tigor EV, Mahindra Electric E20 Plus and eVerito. However, more expensive EVs such as the Hyundai Kona Electric which retails for INR 2.37 million (~RM 134k), which do not qualify for the FAME II incentives can still take advantage of Maharashtra’s early-bird scheme.

With more EV models from Tata and Mahindra in the pipeline, LMC Automotive forecasts that EVs will make up 15 percent of Tata's and 15 to 20 percent of Mahindra's total passenger vehicle volume by 2028.