More than 15 states in India have proposed or adopted policies for the promotion of EVs, all of which are complementary to national- and city-level policies. These include the Delhi National Capital Region, as well as the automotive manufacturing hubs of Haryana, Maharashtra and Tamil Nadu.
Among the various state policies, the revised EV policy announced earlier this month in Maharashtra will be of particular benefit to India’s nascent EV industry. Firstly, Maharashtra is India’s second-largest vehicle market and third-largest vehicle manufacturing base. Secondly, it is home to local players Tata Motors and Mahindra & Mahindra, both of which are planning to launch nearly 20 electrified and BEV models by circa 2025-2026. The updated policy will undoubtedly provide an impetus to build up their respective EV portfolios in the coming years.
Armed with funds of ₹9.3 billion (US$125 million), which are valid until 31 March 2025, the state government is aiming for 10% of all new registered vehicles (including two- and three-wheelers) to be EVs by 2025, and for electric Passenger Vehicles to account for 5% of new registrations by that same year.
Not only does the updated policy waive road tax and registration fees (while offering additional incentives under an ‘early bird’ scheme) to entice buyers, but the Maharashtra government is also aiming to add 2,500 charging stations in seven urban agglomerations over the next four years, 60% of which will be located in Greater Mumbai alone.
Among the first to benefit from the policy will be buyers of Tata’s Nexon and Tigor EVs, thanks to incentives of up to ₹250,000 (more than US$3,000) for purchases made before 31 December 2021 under the ‘early bird’ scheme. This should further bolster sales of both vehicles in the coming months.
In addition, Maharashtra wants to electrify 25% of all public transport and last-mile delivery vehicles over the next four years in Greater Mumbai, Pune, Nagpur, Nashik and Aurangabad. This should convince Tata to bring the Ace EV Mini Truck (which is currently under development) to market sooner rather than later, particularly given rival Mahindra’s plans to introduce the Jeeto EV by 2023.
The revised Maharashtra EV policy also incentivises the creation of EV components and battery manufacturing facilities, which may convince Tata to set up a battery manufacturing plant in the state. Chairman of Tata Motors, Natarajan Chandrasekaran, has already stated that Tata Group “is actively exploring partnerships in cell and battery manufacturing in India and Europe to secure our supplies of batteries”.
In the long term, we expect the ‘Maharashtra EV Policy 2021’ to help accelerate the plans of Tata and Mahindra. With several existing Tata Passenger Vehicles likely to have electric variants in the future, electric powertrain share of the brand’s total Passenger Vehicle volume is estimated at 15% by 2028. This equates to about 60k units, based on our current forecast. For Mahindra, meanwhile, electric powertrains are set to account for 15-20% of its SUV volume by 2028, representing 40-60k units.