A dive into the 2-wheeler EV adoption landscape of Delhi and Karnataka

The electric vehicle (EV) revolution is gaining momentum across India, with Delhi and Karnataka emerging as significant players in this transformative journey. Delhi and Karnataka are the leading states in India when it comes to EV adoption in the 2-wheeler segment. Delhi has the second-highest number of 2-wheeler EVs while Karnataka ranks third. Delhi’s EV adoption is government-driven driven whereas Karnataka’s EV adoption is driven by its consumers. 

Karnataka, despite its minimal subsidies and consumer incentives, has witnessed a remarkable surge in new EV registrations, reaching 73,432 in 2022, a significant leap from 6,453 in 2019. The state has managed to carve out a niche in the EV market, particularly in the 2-wheeler segment, even without direct consumer subsidies. On the other hand, Delhi registered 35,000 new two-wheeler EVs in 2022. The Government of Delhi has constructed charging stations, provided subsidies, and facilitated scrapping of Internal Combustion Engines (ICE vehicles). The path to widespread EV adoption is paved with diverse strategies, policies, and outcomes. Let’s explore how differing strategies and state policies around road tax and registration fees of Delhi and Karnataka have shaped their current positions in the EV market. 

FAME II Subsidy

The FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) subsidy program was introduced by the Indian government in 2019. It aimed to encourage the use of electric vehicles by providing financial incentives. This subsidy is applicable to all states in India. Under the scheme, the government set aside INR 10,000 crores (USD 1.2 billion) to support electric two-wheelers. The government offers an incentive for the purchase of electric two-wheelers at the higher of 15% of the vehicle's factory price or INR 15,000 (USD 180) per kWh of battery capacity.

State Subsidies

Delhi government is increasing the adoption of 2-wheeler EVs by providing subsidies to lower prices of 2-wheeler EVs. The 2-wheeler vehicle market is a price-sensitive segment. One of the main reasons the Delhi state government is leading India's EV race is because it has the highest subsidy among all states in India whereas the Karnataka government still refuses to subsidize the sale of scooters. Delhi government provides government subsidies to consumers based on the battery capacity of 2-wheeler vehicles. INR 5,000 (USD 60) is provided for each kilowatt hour (kWh) of battery capacity of the vehicle up to INR 30,000 (USD 360) maximum. 

On the other hand, Karnataka introduced an Electric Vehicle and Energy Storage Policy in 2017 to support short-distance mobility, where electric two-wheeler taxis were encouraged. In order to promote the adaptability of EVs, the Government of Karnataka has exempted from payment of taxes on all electric non-transport and transport vehicles including e-rickshaws and e-carts under the Karnataka Motor Vehicles Taxation Act 1957. A basic comparison between the prices in Delhi, Karnataka, and other states will demonstrate the difference. The average price of a 2-wheeler EV in India is INR 134,885 (USD 1,620). However, after accounting for FAME II,  state subsidy, and taxes, the price in Delhi comes down to INR 123,776 (USD 1,486.37) compared to INR 141,504 (USD 1,700) in Karnataka, a staggering 15% difference.

Charging Stations

The availability of charging stations is crucial in mitigating range anxiety among potential EV adopters. Delhi, with its 1627 charging stations, has managed to create a more reassuring environment for EV users compared to Karnataka’s 704 stations. The disparity in charging infrastructure not only impacts consumer confidence but also practically influences the ease of EV usage, especially for long-distance travel.

Exemption of Road Tax and Registration Fees 

Karnataka has witnessed a steady ascent in EV registrations, reaching a commendable 2.36 lakh (236 thousand) vehicles, with two-wheelers dominating the market share. EV two-wheelers hold 87.39 percent of the market share and this outcome stems from the government's initiation of a road tax exemption since 2016. 

However, the government’s proposed policy alteration, which seeks to rescind the zero percent road tax and impose a 50% tax instead, has stirred concerns among EV enthusiasts and consumers. While Bengaluru has emerged as a leader in EV registrations, the prospective policy change has sparked a dialogue among consumers, who, amidst concerns regarding battery longevity and high replacement costs, urge the government to uphold the zero road tax in the forthcoming years, especially considering the already existent challenges and the relatively higher costs of EVs compared to their internal combustion engine counterparts. 

Scrapping for ICE vehicles

Electric 2-wheeler owners in Delhi will also be eligible for a Scrapping Incentive for scrapping and deregistering old Internal Combustion Engine (ICE) 2-wheelers. The government of the National Capital Territory of Delhi (GNCTD) will also provide an incentive of up to Rs. 5,000 subject to evidence of matching contribution from the dealer or OEM and confirmation of scrapping and de-registration of vehicles.

Social Issues 

A major hurdle encountered by potential EV adopters is the range, or travel distance on a single charge, which is closely connected with another substantial barrier of limited charging infrastructure. The scarcity of accessible charging stations and the limited travel distance per charge, especially in non-metropolitan and rural areas, pose practical challenges for long-distance travel with EVs. Furthermore, the absence of standardization in the EV sector, particularly concerning charging networks and battery technologies, creates a fragmented ecosystem that hinders good user experiences and compatibility among various EV models and charging platforms. Lack of consumer awareness and education about EVs, their operational nuances, and overarching benefits, limits the acceleration of EV adoption, as uncertainties cloud consumer perceptions.

Conclusion

The government of Delhi has effectively stimulated individual EV adoption through substantial subsidies and infrastructure development reducing the upfront cost of EVs.  Karnataka, on the other hand, has taken a more indirect approach by targeting a broader ecosystem rather than individual consumer incentives. The state’s policies such as road tax exemptions have fostered a favorable environment for EV adoption, particularly among businesses. Both states have made significant strides in the EV domain, yet their experiences suggest that a multifaceted approach that includes both consumer incentives and robust infrastructure development may be more effective in encouraging widespread EV adoption. 

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