Abstract
The initial cost of battery electric vehicles (BEVs) is higher than internal
combustion engine-powered vehicles (ICEVs) due to expensive batteries.
Various factors affect the total cost of ownership of a vehicle. In India,
consumers are concerned with a vehicle’s initial purchase cost and prefer
owning an economical vehicle. The higher cost and shorter range of BEVs
compared to ICEVs severely limit their penetration in the Indian market.
However, government subsidies and incentives support BEVs. The total cost of
ownership assessment is used to evaluate the entire cost of a vehicle to
find the most economical option among different powertrains. This study
compares 2W (two-wheeler) and 4W (four-wheeler) BEV’s cost vis-à-vis
equivalent ICEVs in Delhi and Mumbai. The cost analysis assesses the current
and future government policies to promote BEVs. Two assumed policies were
applied to estimate future scenarios. Annual distance traveled, battery
replacement assumptions, and fuel/electricity prices were used for
sensitivity analyses. It was found that the total cost of ownership of 2W
BEVs in Mumbai and Delhi was lower than the ICEVs, only if heavily supported
by government subsidies and incentives. In contrast, with assumed future
policies, owning 4W BEVs was costlier, even with government subsidies. This
study showed that if a vehicle travels more than the average annual distance
traveled, BEVs can be a better option and make sense for niche applications
such as taxi fleet operations or ride-hailing services. The current
incentives were much more for 4W than 2W, implying a disproportionate
allocation of subsidies to the wealthier, who can afford 4W vehicles. The
funds required for subsidies, losses in fuel taxes because of lower sales,
and tax exemptions offered to BEVs could cost up to ₹146,062 crores (i.e.,
$19 billion) annually to the Indian government in 2030, which is ~ ₹973 per
capita, excluding investments required to build charging infrastructure.
Therefore, India needs a targeted subsidy allocation plan, prioritizing 2W,
and a phased strategy for an orderly and inclusive transition to a
sustainable mobility future.
