Automakers will have to add EV models as markets are competitive, road transport minister Gadkari says

New Delhi: Union road transport and highways minister Nitin Gadkari said automakers that are not manufacturing electric vehicles will pay the price and will be forced to make the shift due to the competitive nature of the market.

"Presently, they (fossil fuel-based automakers) have got good sales… but they don't want to change… But they will face the cost," Gadkari said at a convention for automotive component makers in the national capital on Monday.

The minister added that market forces will compel the reluctant auto companies to diversify their portfolios.

"This is the time that you have to change… The people who are going to accept the best technology in the world, cost-saving fuel technology in the world, creating less pollution and having reasonably good cost, they already have a good future," Gadkari said. "The market is full of demand. The survival of the fittest is the law. Those who can understand and those who are ready to change, they can get good performance, good orders, and good support from the people."

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He added consumers will buy vehicles that are affordable, and automakers will have to fall in with the demands of the market. On automobile companies starting their green transitions late, Gadkari said they would lose market share once they decide to enter the EV market.

Among Indian automakers, Tata Motors has a significant presence in the EV market with multiple models. Companies such as market leader Maruti Suzuki and Mahindra & Mahindra have focussed on mild and strong hybrid vehicles.

About 1.6 million EVs were sold in India in FY24, of which 90,432 - or 5.4% - were four-wheelers, according to data on the website of the Society of Manufacturers of Electric Vehicles.

Price parity

Gadkari reiterated his stance made last week that EVs no longer need to be subsidised because price parity between EVs and petrol- and diesel-driven vehicles would be achieved in about two years. He said as more automotive and battery storage manufacturers enter the market, the prices of EV batteries would fall and the vehicle itself would become more affordable, making it a more attractive choice for consumers. 

To be sure, the minister clarified that he was "not against" fossil fuel-powered vehicles.

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Asked if India would reach its target of EVs accounting for 30% of vehicle sales by 2030, Gadkari said consumers were making more economical and environment-friendly choices and automakers would have to fulfil that demand.

Gadkari also said India needs a substitute for imported fuel that is indigenous, pollution-free, and cost-effective. He added that fossil fuels make up a considerable part of the country's imports and reducing them is a challenge for the government.

He said semiconductor technology and battery storage technology being developed by the private sector would make green energy-powered automobiles more affordable and efficient.

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EV sales in the country have been lacklustre, and localisation has been growing slowly. While the government plans to phase out the import of EV components under subsidy schemes such as the Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles (FAME) and the Electric Mobility Promotion Scheme (EMPS), India still does not manufacture key components such as battery cells.

According to the ministry of heavy industries, as of August 2023, the share of two-wheeler EVs was 5.28% and that of four-wheelers was 1.99%. Data from the government's Vaahan portal indicated a 16% drop in EV sales in August from a year earlier.