Technical Analysis of FAME II

• 06 Apr 2019

The NITI Aayog and the Rocky Mountain Institute (RMI) released a report on opportunities for the automobile sector and government under the Faster Adoption and Manufacturing of Electric Vehicles II (FAME II) scheme.

• The technical report titled ‘India’s Electric Mobility Transformation: Progress to Date and Future Opportunities’, quantifies the direct oil and carbon savings and it also quantifies the catalytic effect that FAME II and other measures could have on the overall Electric Vehicle(EV) market.

Key Highlights

• If FAME II and other measures are successful, India could realize EV sales penetration of 30% of private cars, 70% of commercial cars, 40% of buses and 80% of two and three-wheelers by 2030.
• Effects of FAME II will go beyond the vehicles that are eligible under the FAME II.
• There is considerable energy and CO₂ savings associated with the vehicles and buses covered by FAME II over their lifetime.
  • Vehicles eligible under FAME II scheme can cumulatively save 5.4 million tonnes of oil equivalent over their lifetime worth Rs 17.2 thousand crores.
• In order to capture the potential opportunity in 2030, batteries must remain a key focal point as the key cost driver of EVs.

Recommendations

• India needs auto industry's active participation to ease electric mobility transition. The auto and battery industries could collaborate to enhance customer awareness, promote domestic manufacturing, promote new business models, conduct R&D for EVs and components, consider new business models to promote EVs.
  • Government should focus on a phased manufacturing plan to promote EVs, provide fiscal and non-fiscal incentives for phased manufacturing of EVs and batteries.
  • Different government departments can consider a bouquet of potential policies, such as congestion pricing, low emission/exclusion zones, parking policies, etc. to drive adoption of EVs.

Way Forward

• India’s electric vehicle market is poised for growth with a blend of policies, such as FAME II, and the automotive industry’s willingness to provide new mobility solutions to the citizens of the country. Such a transformation will create enormous economic, social and environmental benefits for the citizens of India.