Government of India to finalize electric car subsidy in April; Advantage Mahindra E2O

The higher ups at one of the foremost Indian car and utility maker weren’t very happy with the 2013 Union Budget tabled weeks ago in the Indian parliament. The major disappointment for Mahindra &Mahindra in the budget came from the increased excise duty on SUVs. While Mr Anand Mahindra and Dr Pawan Goenka expressed disappointment with the hike in excise duty, Mr Chetan Maini and Mr Pravin Shah signified their disappointed over the non-announcement of subsidy for electric vehicles. However, the electric vehicle subsidy is definitely in the works and this subsidy could be announced by April.

2012 Mahindra Reva NXR Electric Car

2013 Mahindra Reva E2O Electric Car

A government official has noted that the exact amount of electric vehicle subsidy is being worked out and that the exact figure would emerge by April 2013. The statement does give rise to some ambiguity in that “By April” could either mean the end of March or for that matter the end of April. Any which ways, the positive thing is that the subsidy is indeed being worked out by the Indian government and the subsidy is expected to go a long way in promoting sales of electric cars and encouraging more city car buyers to jump on to the electric car bandwagon.

While the exact amount of subsidy remains unknown at this point in time, a sum of about 1 lakh to 1.25 lakh rupees could be the amount that electric cars like the Reva E2O are expected to get. We’re saying this as the government official who has talked about the subsidy has gone on to state that the subsidy is aimed at halving the time for recovery of the additional initial costs of electric cars by half. Here’s the exact text of that comment,

The operating costs of an electric vehicle are one-third of that of a petrol car. For a petrol car, which costs around Rs 5 lakh, the cost of an EV is Rs 7.5 lakh. If we assume that a car is driven 10,000-12,000 km every year, it would take six years for a consumer to recover costs on an electric vehicle. We are planning to reduce the recovery period to half at three years. The exact amount of the subsidy provided by the government is being worked out and will be finalised by April.

Going by the above comment, halving the break even time for electric cars implies that the 2.5 lakh rupee difference that exists between internal combustion cars and electric cars will entail a subsidy of about 1.25 lakh rupees. So, that could be amount of money that the Reva E2O could get as subsidy.

Source BusinessStandard

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