In a move to encourage more green initiatives and to control pollution, the Indian government is planning to ask different taxi aggregators like Ola and Uber to convert at least 40% of their entire fleet into electric cars by the year 2026. This would make quite a big impact on the bigger players like Ola and Uber, who might even have to start next year itself if they are to achieve this target.
Backed by the Softbank Group, both Ola and Uber will have to set smaller targets and start next year to achieve 2.5% conversion by 2021, 5% conversion by 2022 and 10% conversion by 2023 if they are to meet the goal gradually of converting 40% of the fleet by the year 2026.
While this is a welcome move, there have been a few attempts at running electric cars for commercial use earlier as well, with the most notable one coming from Ola. However, due to insufficient infrastructure and high operational costs, these attempts haven’t had a lot of success. The Indian government though is trying to renew these attempts and layout better infrastructure for electric cars to be able to operate with ease in order to battle the problem of increasing pollution and fulfill the commitments made as part of the 2015 Paris Climate Change Treaty. Meeting this mark of electrification will also help the government reduce the oil imports, which take out a huge chunk of the country’s economy.
As a reference point, India can look at the neighboring country China, which is already a world leader in the electrification of cars. China has achieved the change by implementing tough sales targets for electric vehicles for the automakers and offering lucrative incentives to taxi operators and aggregators if they add electric vehicles to their fleets.
In India, the presence of electric vehicles is lacking quite far behind, with just 3600 cars being sold in the previous financial year. While this number represents a growth of about 3 times from the year before that, it still counts for only 0.1% of the auto sales in the country, where 3.3 million diesel and gasoline cars were sold in the same period. During this time, more than 1.3 million electric cars were sold in China.
Niti Ayog, the Indian think tank led by PM Narendra Modi, has been in talks with several important ministries to plan how the conversion can be implemented. In a meeting on May 28, attended by officials and ministers from road transport, steel, renewable energy power, trade, heavy industries and many more, it was recommended that taxi operators should be encouraged to convert their fleets to electric vehicles. Another big recommendation that came out of this meeting was that all the commercial vehicles being sold from April 2026 onwards should be electric.
The change is not just restricted to cars. The recommendation also included two-wheelers being sold for commercial use, including deliveries, transport, and other functions. It was also suggested that the two-wheelers sold for private use also be made electric, with the conversion timeline being set for over the next 6-8 years. This conversion might actually be slightly easier than cars, since there are a few major names already operating in the electric two-wheelers space, including Hero Electric, Okinawa and Ather Energy to name a few. Recently it was also announced that Sahara is entering the electric vehicles market, with the first steps to be taken in the two-wheeler space.
On the other hand, when it comes to cars, only Mahindra & Mahindra and Tata Motors are the major names making significant developments in the space. This might present a challenge for all taxi aggregators since meeting the estimated targets could prove difficult with just two manufacturers.