The lure of Rs 30,000 crore expected savings in oil costs has made the Government very bullish about the future of electric and hybrid vehicles (xEVs) in India.

It plans to fund about 60 per cent of the Rs 23,000-crore needed to build a new xEV eco-system from scratch over eight years, with the rest being borne by the auto industry.

Adopted from a Booz & Co study commissioned by the Heavy Industries Ministry last year, the investment targets local manufacturing of 6 million electric two- and four-wheelers by 2020.

With Prime Minister Manmohan Singh expected to unveil the ‘National Mission for Electric Mobility’ in about three months, the framework has been granted an ‘in-principle approval’ at the first meeting of the National Council for Electric Mobility (NCEM) on Wednesday, said S. Sundaresan, Secretary of Heavy Industries. The meeting adopted the ‘National Electric Mobility Mission Plan 2020’.

“We’re talking about a massive scale intervention. There’s no doubt we need xEVs, but the concern is the viability gap, where the customer does not want to pay the price difference. This will reduce in time. But, subsidy will have to stay for 7-8 years,” said Pawan Goenka, Mahindra’s President for Automotive and Farm Equipment business.

Under the plan, the industry will invest in manufacturing xEVs, while it will partner with the Government in forming an R&D infrastructure. This would encourage local suppliers to manufacture key components such as lithium-ion batteries, which are currently imported and drive up costs. Charging infrastructure in metros for electric cars and scooters will also be set up.

roudra.b@thehindu.co.in