An Economic Assessment of Electric Two-wheeler and Impact of Policy Instruments in Indian Sub-nationals

Abstract

Conventional fuel-based vehicles are one of the major sources of greenhouse gas emissions. Transport sector, therefore, has a huge negative impact on the environment. Electric vehicles (EVs) are perceived as highly promising innovations in environmentally conscious transportation solutions to address pollution and energy demand in the transport sector. The present study focused on carrying out an in-depth economic assessment of EVs across sub-national regions in India. It aims to assess the efficacy of the already implemented policy measures, including subsidies and incentives, while looking at those factors that promote the successful integration of EVs into the various regional frameworks. An analysis of this nature is very important because it will give the practical and financial feasibility of EVs in a country characterised by enormous regional economic disparities. A prime approach of this research is the total cost of ownership method, which fully works out the cost per kilometre for EVs vis-à-vis conventional fuel-based two-wheelers over a 15-year life cycle. The analysis includes initial purchase cost, operating and maintenance (O&M) costs and the cost of battery replacement which are calculated at the present value.

Additionally, the authors incorporate sensitivity analysis to understand the impact of government’s incentive to promote EVs demand. The sensitivity analysis presents that due to differences in fuel prices, tax structure and subsidy rates, there is a high disparity in cost-effectiveness of electric scooter ownership. Notably, cost per kilometre of EVs is less expensive than petrol variants in most of the tested scenarios which entails the lack of subsidies. This analysis can aid policymakers in developing more tailor-made policies that enhance the economic viability of the EV option, considering regional factors and existing fiscal tools.