Pawan Goenka said with EV prices coming down and demand picking up for such vehicles.
New Delhi: Mahindra & Mahindra (M&M) expects the electric vehicle segment to stabilise in India over the next five years with vehicle prices coming down due to reduction in battery cost, a top company official said on Thursday.
Speaking at the annual convention of SIAM, M&M Managing Director Pawan Goenka said with EV prices coming down and demand picking up for such vehicles, subsidy requirements would come down over a period of time.
"For commercial viability of eIectric vehicles, I think we will need FAME scheme for the next 3-4 years," Goenka said. Elaborating further, he added that battery cost is coming down and in the last two years it has already come down by 20-25 per cent.
"I expect another 20-25 per cent reduction from now to next two years. I think we would not require FAME and that according to my estimates will take four years. After this scheme of five years we should not require FAME for vehicles," Goenka said. The second phase of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme is expected to be kicked off on Friday.
The scheme was introduced in a bid to incentivise sales and manufacturing of electric vehicles in the country. Under Phase II of the initiative, the government has earmarked a budget of Rs 5,500 crore to be used over the next five years and will be used to provide subsidies to all types of electric vehicles. Goenka said he expects electric vehicles to account for 30 per cent of the overall auto market in the country by 2030.
"If we are not reaching 1,000 units a month by fourth quarter I'll be worried. That should be the first milestone, 25,000 vehicles a year in 2020, then by 2023-24 we should be reaching around 20,000 a month. If we can reach these milestones we can think of 30 per cent by 2030," Goenka said.
Union minister Nitin Gadkari earlier in the day had envisaged EVs to account for 12 per cent of the market in the next five years. Goenka said for EV segment to expand in the country, there is a need to create a virtuous cycle with one thing leading to another.
"It can (sales) happen only when infrastructure is there, vehicles are affordable and range is good and lots of options available for the consumer," Goenka said.
He said that besides charging infrastructure, the segment would also expand if overall maintenance cost of EVs comes down. "Also, bring down selling price by 8-10 per cent from where we are. I think in the next 2-2.5 years that will happen," Goenka added.