Context

During the presentation of the Interim Budget 2024-25, the government announced plans to expand the electric vehicle (EV) ecosystem. The government set aside ?2,671 crore for the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India) scheme.

Background

• In Budget 2023-2024, the government allocated ?5,172 crore for FAME II scheme, and further, extended the scheme by a year to incentivise the purchase of electric vehicles.

The number game  72,930 new electric four-wheelers were registered in the country in 2023 (two-fold increase from 2022). Electric two-wheelers (mopeds, e-rickshaws) and other three-wheelers, constituted 56% and 38% of the total EV sales for the year. In 2023, EV captured a 6.3% market share, a rise from pre-pandemic levels that lingered just below 1%.

What is Electric Vehicle (EV)?

• An electric vehicle (EV) is a mode of transport which is powered by electricity.
• Unlike conventional vehicles that use a gasoline (petrol) or diesel-powered engine, EV uses an electric motor powered by electricity from batteries or a fuel cell.
• Because it runs on electricity, the vehicle emits no exhaust from a tailpipe and does not contain the typical liquid fuel components, such as a fuel pump, fuel line, or fuel tank.

Types of EV
Battery Electric Vehicle (BEV)	Fully powered by electricity
Hybrid Electric Vehicle	Uses both the internal combustion (usually petrol) engine and the battery-powered motor powertrain.
Plug-in Hybrid Electric Vehicle (PHEV)	Uses both an internal combustion engine and a battery charged from an external socket (they have a plug).
Fuel Cell Electric Vehicle (FCEV)	Electric energy is produced from chemical energy.

What are the challenges to transitioning to electric mobility?

• Lack of charging infrastructure: The key barrier on the path of adoption of EV or Hybrid Vehicles is the lack of public charging infrastructure in India. The highest number of EV charging stations was in Delhi (1845) and then in Maharashtra (660) followed by Uttar Pradesh (406).
• Expensive affair: EV often cost 15 – 20% more than their conventional counterparts, making affordability a major roadblock for individuals and communities with limited financial resources. 
• Higher power requirement for heavy vehicles:Fast-charging means power levels of 50-350 kW for cars and up to 1,000 kW for heavy-duty vehicles.
• Anxiety over the distance that can be travelled per battery charge is a cause for concern.

The global electric vehicle (EV) sector is booming with an anticipated annual growth rate of 15.9% up to 2035 when sales are expected to reach 51.6 million units.

 Government Interventions:

• The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme II, which provides incentives for EV manufacturers and buyers. These incentives include subsidies, tax rebates, preferential financing, and exemptions from road tax and registration fees.
• The National Electric Mobility Mission Plan (NEMMP),which sets out the target to achieve 6-7 million sales of hybrid and electric vehicles year on year from 2020 onwards by providing fiscal incentives.
• The National Mission on Transformative Mobility and Battery Storage, which seeks to create a comprehensive ecosystem for the adoption of EVs and support the establishment of Giga-scale battery manufacturing plants in India.
• The Production Linked Incentive (PLI) scheme, which provides incentives for the manufacturing of electric vehicles and components.
• The Vehicle Scrappage Policy, which provides incentives for the scrapping of old vehicles and the purchase of new electric vehicles.
• Go Electric campaignaims to create awareness on the benefits of EVs and EV charging infrastructure.
• In the 2023-24 Union Budget, a budget allocation of INR 35,000 crore was announced for crucial capital investments aimed at achieving energy transition and net-zero targets by 2070.