EVs are the future but a premature transition through bad policy is undesirable

Relevance: India’s Electric Vehicle (EV) policy

Synopsis: An EV policy that is biased towards a premature transition to EVs can have unintended consequences. A look at the consequences and a way forward.

Background

Around 81% of the 18.6 million vehicles sold in 2020 were two-wheelers. Hence, the transition from an industry dominated by vehicles run through internal combustion engines to EVs, will be in sync with India’s climate change goal.

But, the inherent enthusiasm for EVs should not lead to unsound policy changes.

Govt support

To quicken the transition to EVs, GoI provides a subsidy to lower the cost of ownership, and some states top up with yet another subsidy. This supportive policy environment has encouraged both traditional manufacturers and newer ones such as Ola Electric to enter the EV market.

Impact of unsound policy changes

In 2019, Niti Aayog proposed all two-wheelers running on combustion engines be banned by 2025. Such unsound policy prescriptions need to be analyzed in terms of the following two consequences:

• Combustion engines subsidize EVs as fuel taxes have emerged as one of the biggest sources of revenue for government, and one that supported the budgets in a pandemic. Revenue stability matters, as governments perform many indispensable functions.
• Strategic issues: Separately, there are strategic issues to consider. China dominates both processing and manufacturing of Lithium-ion batteries. Moreover, mineral ores and concentrates for them are found in just a few countries, with China again having a key position.

Thus, a policy which pushes for a premature transition to EVs can have unintended consequences.

What are some negatives associated with EVs?

– Though a running EV does not emit CO₂, the power plant on which it relies for its charging does, depending on the fuel used.

– The EV manufacturing process releases more carbon than cranking out a diesel or petrol car.

– EVs use batteries made of rare earth elements like lithium, nickel and cobalt, the mining of which is extremely polluting.

– And lastly, the clean disposal of these batteries, once their life is over, may be a serious problem.

Way forward

For now, India’s subsidized EVs should focus on competing with combustion engine vehicles, which have consistently met escalating tailpipe emission standards.

Note: Tailpipe emission standards specify the maximum amount of pollutants allowed in exhaust gases discharged from an internal combustion engine of a vehicle.