The viability of EVs hinges on deregulation of the transport sector

The last two months have been very eventful for electric vehicles in India. Starting with Nagpur’s Electric Mass Transit Project, the sector has been abuzz with various entries into the electric vehicle (EV) scene. With Ola Cabs calling the shots in Nagpur, two Munjal family ventures– Hero Future Energies and Hero MotoCorp announced their foray into the charging infra sector, while public-sector NTPC Limited set up charging stations in the National Capital Region (NCR). Further, it was also announced that the Centre was reportedly in talks with Japanese investment major Softbank to procure two lakh electric buses.

Given Piyush Goyal’s announcement that India would sell only EVs by 2030, this might sound like things are on track, but are they?

Arguably, the question that arose after this statement was whether this would be feasible or not. At this juncture it is crucial to look at Goyal’s words. The target, according to what Goyal to PTI reporters was to ensure that only EVs are sold. Going by this, it would be possible to ensure that fuel-based vehicles are not sold, either through taxation or emission-based policies. There is no doubt about that. However, whether electric vehicles would be practical is something with a bigger question mark at the end of it.

So, are electric vehicles really that viable from a practical view?

Possibly not, at least not yet. The market is still not open enough for demand and supply economics to take over.

Start deregulating the market

Governments across the country have stopped private operators from plying legally. Of course, this doesn’t stop many of them from plying illegally, like the ones commonly seen on Bangalore’s roads. When the Government of Maharashtra is partnering with Ola Cabs to provide electric cabs in Nagpur, why can’t it allow Ola to operate electric buses? Private players will be able to raise the capital required for electric buses faster than government bodies and given the stark contrast between the two in terms of operations and quality of service, they would operate them better too.

Services like Ola Shuttle, CityFlo and ZipGo appeal to the middle-class by offering services such as a reserved seat, free wi-fi, cashless payments and convenient timings. If the government cannot offer these services, which it evidently seems unable to do so, let the markets take over.

Some manufacturers like Volvo Buses are even offering their buses on a turnkey basis where the operator need not buy the bus, but just pay the company who will lease out the buses. Public sector agencies may not go in for these for various reasons, but the private sector surely will.

Charging Points Need Deregulation Too

From all the investment that we have seen so far in charging spaces, there is a clear trend visible. Charging infrastructure is entirely in the hands of a few large bodies establishments that have money. While it is perfectly reasonable to expect the government to provide charging points as a means of garnering additional revenue, it is not desirable for the government to either be involved in, or control the entire system.

As we move towards a more market-oriented economy, we need to understand that EVs, like any other commodity needs to be deregulated massively.

To start this, we need to enable individuals to lease out parking spaces for those looking for them. Not every major provider will have a charging point in the vicinity, and not every vehicle might have enough battery power to go up to a charging point. If an individual has a vacant parking lot with a charging point, they can then choose to lease it out to someone. Leasing out vacant spaces as parking is not exactly legal in India and the closest we have come to legalising this was in 2016 when the Gurgaon Municipal Corporation proposed to make amendments in the local laws to allow people to do so.

Outside of India, leasing out vacant lands as parking spaces is quite common with several countries even having an app for it. If the sector was deregulated, this would solve a lot of problems for us, from congestion to charging and would in many ways make commuting easier. It might even encourage people to take up public transport for part of their journey while leaving their vehicles to charge at some parking space. This system of ad-hoc charging spots will answer a lot of demand and supply questions similar to how platforms like Airbnb helped make living spaces more affordable.

Unlike fuel, electricity as a commodity is a lot more flexible. In this scenario, electricity is not being resold– only the parking space is being leased out. Electricity is another commodity being consumed by a tenant who in turn pays for it. Further, similar to concept of peak pricing followed in the hospitality and transport sector, such pricing can be applied here too. Since most distribution companies charge different rates based on the total electricity consumption, owners can change price brackets as and when their consumption goes up.

Local bodies also could provide incentives or tax rebates to builders who provide charging spaces in residential complexes. Since many commercial and industrial complexes have charging points, it shouldn’t be much of a problem to have this emulated across all sectors.

The government needs to ponder about deregulating the transport sector heavily, if it intends for a complete EV scene by 2030.

Note: This article was written on 13 June 2017, after reading an article titled A misguided push towards electric vehicles. For some reason, I thought it would be a great idea to send this article across to Mint, which was stupid on my part. The Mint team did respond to me, but then practically sat on this article for over a month, making it evident that they had rejected the article but had failed to inform me about it.