Tata Motors Urges Government to Extend EV Incentives for Enhanced Adoption

Tata Motors, through its subsidiaries Tata Passenger Electric Mobility and Tata Motors Passenger Vehicles, has called on the Indian government to extend incentives for electric vehicles (EVs) by three more years. This move aims to replicate the supportive environment seen in Beijing, which has committed to backing EV adoption until they constitute at least 20% of all new car sales.

Tata Motors, a leader in the Indian EV market, emphasizes the need for continued incentives to sustain the momentum in EV adoption. The company, which has seen a significant rise in its stock price over the past five years due to growing demand for electric cars, suggests that the Indian government should follow the example of major economies like China and Germany. These countries have continued to provide demand subsidies until achieving a substantial level of EV adoption.

Currently, the Indian government’s Faster Adoption & Manufacturing of Electric Vehicles (FAME) program, in its second phase (FAME 2), is set to conclude on March 31. This program has been instrumental in promoting EV adoption, but Tata Motors believes that extending these incentives is crucial for maintaining the growth trajectory. The Parliamentary Standing Committee on Industry also recommended in 2023 that the government should broaden the scope and extend the FAME program by at least three more years.

Electric cars accounted for 2.5% of new vehicle sales in India last year, with around 83,000 units sold. In stark contrast, China sold 6.68 million pure battery-powered vehicles in 2023, with New Energy Vehicles (including plug-in hybrids and battery electrics) making up nearly a third of all vehicle sales in the first two months of the year. China’s aggressive support has led to it becoming the dominant player in the global EV market, accounting for six out of every ten EVs sold worldwide.

To accelerate EV adoption in India, Tata Motors has proposed extending the current incentive of INR 10,000 per kWh battery size for electric taxis for another three years. Additionally, the company advocates for including personal vehicles in future incentive schemes to enable broader adoption. Presently, the government provides subsidies under FAME 2 for passenger vehicles used by taxi operators, but Tata Motors suggests expanding these incentives to encompass personal EVs as well.

Despite the number of electric cabs growing year on year to reach a cumulative 16,000 EVs, this is still below the government’s target of 30,000 battery-powered taxis. Tata Motors notes that there are substantial funds remaining from the initial FAME 2 allocation for taxis, which could be utilized to achieve the desired policy goals in shared four-wheeler mobility.

Tata Motors highlights the environmental benefits of EVs, particularly in shared mobility applications where urban emissions are high. With zero tailpipe emissions, EVs can significantly reduce air pollution in heavily polluted cities like Delhi and Mumbai. Given the higher upfront costs of EVs, demand incentives are essential for fleet owners to transition from traditional vehicles to EVs.

Currently dominating the local EV market with a share of over 70%, Tata Motors plans to expand its EV portfolio further. The company aims to increase EV sales from the current 14-15% to 25% by 2027 and 50% by the end of the decade. This expansion is seen as critical for reducing air pollution and achieving broader climate goals.