The Emptiness of the Delhi EV policy 

At InsightEV, we like hot topics to cool down a bit before we look at them in detail…and a bit of cynicism. The Delhi EV policy was hot news a few days back, but we decided to give it a miss. The reason is that when we look at something fresh, we tend to pick out the creamy positive aspects of the subject and forget that we should also be scrutinising how realistic the policy actually is.

Now it is time to dissect the policy document to see what makes sense and what was just put in when a healthy dose of biscuits and tea clouded the drafters’ judgment. 

First, the facts

The document that has been uploaded on the very government website on 11th April is a draft proposal. There are 30 days for back-door negotiations, objections, and figuring out things before any actual regulations are drafted.  

The Delhi Transport Department has provided a Gmail address for people to send their feedback. Read that again….a Gmail address!

The Policy Points Regarding Registration of New Vehicles

1. No ICE two-wheelers would be registered in Delhi post Apr 1st 2028. This part of the policy is the biggest deterrent to ICE and is designed to push electrification in a big way.
2. From 01 January 2027, only electric three-wheelers (L5) shall be permitted for new registration in the NCT of Delhi.
3. For fleet operators: You can add to the ICE two-wheeler fleet only till the end of 2026. Post that, any new addition has to be an E2W. 
4. Also, for fleet operators: No conventional ICE vehicles running purely on diesel or petrol shall be inducted in the existing fleet of 4-Wheeler LCVs, 4-Wheeler LGVs (N1 category up to 3.5 Ton) with effect from 01.01.2026. But isn’t the date already gone?  
5. Schools have to convert 10% of their fleets within year 2 of notification of the policy, 20% of the fleet within year 3, and 30% of the fleet by 31st March 2030. 

The Policy Points Regarding Incentives

1. In the first year of the policy, E2Ws get INR 10,000 per kWh, limited to INR 30,000 per vehicle. This drops to INR 6,600 per kWh, limited to INR 20,000 per vehicle in the second year of the policy, and INR 3300 per kWh, limited to INR 10,000 per vehicle in the third year of the policy. 
2. Prospective buyers of E2W switching from ICE can also avail of a ₹10,000 gap benefit. Obviously, for any vehicle owner, their two-wheelers’ resale value has to be less than INR 10,000 for this part of the equation to work. 
3. The benefits of zero registration duty and zero road tax on E2Ws remain the same as before.
4. For three-wheelers, the benefits are not linked to battery size. In year 1, they get INR 50,000 as a direct subsidy, which drops to INR 40,000 in Year 2, and further drops to INR 30,000 in Year 3. Three-wheelers also get a scrappage benefit of INR 25,000. 

Policy Points Regarding Charging Points

All OEMs operating in the National Capital Territory of Delhi shall ensure the deployment of at least one public electric vehicle charging station per dealer, comprising a minimum of three (3) charging points for two-/three-wheelers and two (2) charging points for four-wheelers.

That is tokenism. The number of mandatory charging points is laughably small. At the same time, it will cause suitable discomfort to the dealers who now have to set them up.

Impact

1. The direct subsidies are only substantial in the first year. After that, they taper very fast. We don’t see them as a major carrot in the long run. 
2. The other carrot, the scrappage-linked incentives, is even weaker. Not too many customers would benefit from that, as Delhi has been phasing out old vehicles over the last few years, and they have steadily made their way out of Delhi. 
3. Nearly half a million ICE two-wheelers were registered last year in the state of Delhi. At INR 10,000 on average in RTO charges, that’s INR 5 billion in state revenue. The government wants to forego all of that as well as provide incentives for electric two-wheelers, which are likely to replace this flow. Even considering a one-to-one replacement in the first year, that’s an outflow of INR 20 billion in the first year of the policy. 
4. The big challenge is differentiating the national capital territory of Delhi from the national capital region, which also encompasses three neighboring states. They are not partners in the policy, and there is no restriction on the inflow and outflow of vehicles to and fro from these states. In the short term, Delhi’s loss would be a gain for the other states if customers decide to stick with ICE vehicles. 

The Policy Skips…

Most two-wheeler users prefer home charging because of lower rates. With most of Delhi living in apartments, getting ground-floor level metered charging to a few million E2Ws over the next five years would be a big challenge. The policy skips this part completely.

The Biggest Hurdle…

The biggest hurdle to the policy would be from the incumbent ICE OEMs. While all of them have electric two-wheelers in their showrooms, the profitability of electric vehicles is nonexistent nowhere close to that of ICE. Delhi is a major market, accounting for 2-2.5% of all two-wheeler sales in the country. The existing players won’t find this a good idea.

Negotiations would already be on as we write this.