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India's Road Transport Minister Nitin Gadkari has expressed confidence that electric vehicles (EVs) may not require government subsidies within the next two years. He attributes this prediction to the anticipated decline in battery prices, which he believes will bring the cost of EVs on par with petrol and diesel vehicles. However, Gadkari clarified that he does not oppose any incentives provided by the Ministries of Finance or Heavy Industries to support the growth of the EV sector. This statement is notable, considering Gadkari's previous public pronouncements advocating for a shift away from petrol and diesel vehicles.
Gadkari's stance on the sale of petrol and diesel cars has softened, as he stated that he is not against their continued existence. He acknowledged that his past statements may have been misconstrued, emphasizing that his primary concern is the country's substantial fuel import bill and the escalating pollution levels in many cities. He believes these factors present a significant challenge for India. Regarding the cost of EVs, Gadkari highlighted the decreasing manufacturing costs driven by falling battery prices. He pointed out that the price of lithium-ion batteries has dropped from $150 per kilowatt-hour (kWh) to $108-110, and he is optimistic about a further reduction to $100 due to increased battery production. This cost reduction, he argues, will enable companies to maintain their profitability even without subsidies.
Gadkari predicted that within two years, the cost of a petrol or diesel vehicle will be equivalent to an EV, eliminating the need for subsidies. He noted that EVs already offer fuel savings for consumers. However, he indicated that he would not object if the Finance Minister and the Minister of Heavy Industries chose to continue offering subsidies to further support the EV sector. Currently, EVs in India are subject to a flat Goods and Services Tax (GST) rate of 5%, whereas petrol and diesel vehicles face a 28% tax rate for smaller vehicles, escalating to over 48% for larger vehicles. Regarding the recent slowdown in EV sales, Gadkari believes the market and consumer preferences will ultimately determine the trajectory of the sector, emphasizing the principle of survival of the fittest.
While expressing optimism about the EV industry, Gadkari expressed deep concern about the high number of road accidents in India. He described the ongoing situation as a “failure” for the government, attributing it to a lack of respect for traffic rules by both motorists and pedestrians. Gadkari highlighted the staggering statistic of around 1.7 lakh people dying in approximately five lakh road accidents annually, with a disproportionate number of victims (66%) falling within the 18-36 age group. The government's target to reduce accidents by 50% has not been achieved, leading Gadkari to conclude that there is a societal problem stemming from a lack of fear and respect for the law.
Source: EVs may not need subsidies in two years on falling battery prices: Gadkari