Driving Change: How Delhi's EV Policy is Paving the Way for a Cleaner Future

On December 23rd, 2019, the Council of Ministers approved the Delhi Electric Vehicles Policy. The policy was officially adopted the following August of 2020. The Delhi Electric Vehicles Policy can be considered the foundation for Delhi’s vision of becoming the EV capital of India. According to the official document, one of the central goals of the policy is to ensure that by 2024, “at least 25 percent of all new vehicle registrations are that of electric vehicles.” At the time of the policy, only 3.2% of registered vehicles were EVs. This goal is connected to Delhi’s larger motivation to reduce air pollution in the nation’s capital. The EV policy push has also been connected to Delhi’s experience during the COVID-19 pandemic in which the city had the rare opportunity to see clear skies and breathe clean air during the stay-at-home order. Finally, the EV policy push highlights the economic and job opportunities related to creating an entirely new EV infrastructure and system. For these reasons, despite the challenges of implementing one of the most ambitious EV policies in the world, Delhi is pushing towards their vision. 

India currently has an EV policy of their own called the FAME India Phase-II scheme. The Delhi Electric Vehicle Policy’s official document notes the significance of the FAME scheme in motivating Delhi to take personal action to quicken the pace of EV adoption. According to the policymakers, the pace of adoption of Electric Vehicles [under FAME] failed to meet expectations…[Delhi’s policy] therefore seeks to put in place a comprehensive set of measures for giving impetus to the adoption of Electric Vehicles.” As one of the most polluted cities in the world, it shouldn’t come as a surprise that the local government is attempting to mitigate the problem as fast as possible. According to an IIT-Kanpur study, vehicles are the second largest and most consistent source of pollutants PM10 and PM2.5 in Delhi. Both particles are known for their harm to the environment as well as human health and related asthma rates. As the second largest contributor, replacing a large proportion of combustion vehicles with EVs could have a significantly positive impact on Delhi’s air quality. COVID-19 provided Delhi with a unique vision of what clear skies and clean air could look and feel like during the stay-at-home order when PM10 and PM2.5 levels drastically reduced. Further, experts reviewing the new EV policy have noticed the significance of the intervention given the pandemic. The pandemic lockdown negatively impacted the overall vehicle market, but especially the electric vehicle market. Between March and April 2020, electric vehicle registration dropped by 93.4%. At the time of the policy implementation, only 3.2% of new vehicle registrations were electric vehicles. Ideally, bringing that number up to 25% by 2024 could have the dual benefit of reducing pollution and boosting jobs and the economy by investing in a larger electric vehicle system. Clearly, the Delhi EV policy, while ambitious, is well motivated. 

There are multiple challenges to achieving the ambitious targets of the Delhi EV policy. The first challenge is one all cities are facing in the process of introducing EV’s to their streets: price. Unfortunately, the vehicles that emit pollutants are cheaper than electric vehicles, reducing purchase incentive. Further, since many individuals only require one vehicle, the incentive to switch to an EV before their existing vehicle malfunctions poses an additional challenge. Further, the convenience of EV’s are an extremely pressing concern among vehicle owners. Both the location convenience of charging stations and the time it takes to charge an EV are serious issues mentioned in studies reviewing opinions among Indian vehicle owners. The charging time can range from slow (8 hours) to fast (15 minutes to an hour) is a negative when compared to the time convenience of combustion vehicles. The same study interviewing one thousand consumers, fleet managers and industry specialists across India found that, on average, a price point of “Rs 23 lakh (or USD 31,000), a charge time of 35 minutes and a range of 401 kilometers from a single charge represent the 'tipping points' to achieve mainstream EV adoption.” In other words, the current price point, charge time, and vehicle range are too high. Fortunately, after reviewing consumers outside of India, though consumers in India require a lower price point, they also are considering the switch two years earlier than the global average and are willing to accept a slightly longer charge time and shorter range. The study concluded that misconceptions about maintenance costs could be preventing consumers from making the switch to EV as 83% of Indian consumers stated these costs as a reason stopping their purchase. Finally, as a leader in EV policy, Delhi must take on the challenge of founding an entire infrastructure and market around EV technology. While they can look to policies from other cities globally, creating a market and funding system will always be a risky task. Nonetheless, for the policy to be effective, each of the challenges like pricepoint, charge time, range, and various EV misconceptions should ideally be addressed. 

Through incentives, regulation, persuasion, leading by example, and targeted education, the Delhi EV policy is tackling their initial goals and the aforementioned challenges. Financial incentives are at the foundation of the policy’s objectives. Working in conjunction with the existing national policy, the FAME India Phase-II scheme, the policy includes fiscal incentives for the purchase, registration, conversion, and scrapping of vehicles. Outlined on the policy’s website, the policy breaks down the incentives by vehicle type and incentive type. For example, while the original price for the approved NYX HX model two-wheeler with a range of 210 km is 121,156 Rs (1,607 USD), there is a purchase incentive of 23,335 Rs (309 USD), exemption of road tax and registration fee with the value of 11,486 Rs (152 USD), and maximum scrapping incentive of 5000 Rs (66 USD). In total, the net on-road price for the original model becomes 86,335 (1145 USD) or 34821 Rs (462 USD) cheaper than before. There are individual fiscal incentives for each approved model of two-wheelers, three-wheeler E-rickshaws and E-autos, and four-wheelers with a similar fiscal net-benefit. There are also interest subversion incentives for loans for the purchase of EVs outlined in the policy. These incentives work to tackle the challenge of EV price point directly. Further, to speed up the conversion process, the policy asks “all delivery service providers to convert 50% of their fleet operating in Delhi to electric by 31st march, 2023 and 100% by 31st March, 2025.” Those who comply will be “eligible for financing support from the Delhi Finance Corporation (DFC).” As for the convenience problem of EV’s, the Delhi EV policy includes a plan for increasing the number and capacity of charging stations and battery-swapping centers throughout Delhi. Expecting that most EV users will use home and workplace charging points, the policy uses a combination of new regulation and incentives to improve charging location convenience among private buildings. Changes in the building bye-laws will require all new home and workplace parking to be “EV ready” meaning 20% of vehicle holding capacity with a safety factor of 1.25. For existing buildings, the GNCTD will provide a grant “for the purchase of charging equipment up to 6000 per charging point for the first 30,000 charging points.” Once again, by attaching a deadline to the incentive, the government rewards those who switch first. In the case of public charging stations, the policy devotes 100% of the net SGST (State goods and service tax) as reimbursement to the Energy Operators for purchase of advanced batteries to be used at swapping stations, and designates providing 24-hour, multi-payment public charging facilities within 3 km from anywhere in Delhi a key objective. By way of dealing with misconceptions, the policy also includes mention of an intensive public outreach programme “focused on creating awareness about the benefits of electric vehicles and key elements of the policy.” Finally, in an effort to take on the challenge of founding an entirely new market and job system to support the adoption of EV’s in Delhi, the policy includes various plans to found the necessary infrastructure. For example, the policy includes the plan to create a Skill Center for EV job training, a Recycling Ecosystem for Batteries, a “State EV Fund” backed by the ‘feebate’ concept of surcharging polluting vehicles while rebating EV’s, and a State Electric Vehicle Board to oversee the establishment of a “dedicated EV cell.” This is just a synopsis of the detailed full policy document, but even the policy summary demonstrates the degree to which Delhi’s EV policy takes into consideration the many challenges of setting such ambitious targets. 

Since the adoption of the policy this past August, Delhi’s government has been eager to update the press with updates on how the implementation process has gone and is going. Phase 1, as it is referred to by Delhi’s power minister Satyendra Jain, has been successful in acquiring 200 land parcels from various land-owning agencies, including the Delhi Metro Rail Corporation (DMRC) for charging stations across Delhi. This is part of Phase 1’s target of installing 500 EV charging points at 100 locations within 3 km of each other by December 2021. The bidder responsible for the supply, erection, testing, commissioning, and maintaining of the stations will be announced in April 2021. The Delhi Electricity Regulatory Commission (DERC) has also set a fixed unit and tariff for EVs at “Rs 4.5/kwh and Rs 4, respectively,” to cushion with the transition. In more recent news, in late February 2021 the Delhi government launched a “Switch Delhi” campaign to persuade vehicle owners to pledge to switch to EV’s in the next three years. Leading by example, one day after the campaign’s launch, the Delhi government announced that they will switch their entire fleet of 2,000 hired cars for EV’s by August 2021. Clearly, the motivation of the government has not waned since the policy’s debut. Still, the local government must deal with their policy’s three-year expiration date and the fact that the majority of consumers in India still believe the price point, vehicle range, and time are still too high to make the switch. Despite the challenges of modern EV technology adoption, Delhi works closer each day to become India’s EV capital and a role model for cities around the world.