Carmakers push eco-cars in India, but face tough ride ahead

By Siddhartha Kumar Jan 5, 2012, 17:13 GMT

New Delhi - Fuel-efficient, hybrid and electric cars were the highlight of India's Auto Expo, which opened in New Delhi on Thursday, but several challenges remain before eco-cars hit the roads in significant numbers.

The theme of the car show was 'green mobility,' and saw the launch of the first-ever electric car by domestic manufacturer Mahindra and Mahindra.

While Maruti Suzuki showcased the hybrid variant of its popular Swift hatchback and models that run on Compressed Natural Gas (CNG), another leading domestic carmaker, Tata, was to unveil its hybrid Manza sedan.

Carmakers from Germany and France also displayed eco-car models, but it was the world's largest-selling electric car, Nissan's Leaf, that drew the most attention.

Organizers said the show had kicked-off the hunt for a small, inexpensive eco-car in India.

'Most major manufacturers are either displaying or working on green technology or fuel-efficient vehicles,' said Arvind Kapur, president of the Automotive Component Manufacturers Association of India (ACMA).

'This is the first edition of the expo in its 25 years that has had such a big focus on such technologies and alternative fuels,' he said.

Carmakers are keen to push eco-cars in India because of the 35-per-cent jump in petrol prices over the past two years.

As high fuel prices pushed down car sales, 80 per cent of 2011 sales were of diesel cars as consumers opted for the subsidized fuel, which is 24 rupees (about 50 cents) cheaper than petrol per litre.

Car market leader Maruti Suzuki said sales of its CNG vehicles had doubled to 72,000 in New Delhi, Mumbai and the western state of Gujarat.

However, with a sharp rise forecast from the current 40 million to 600 million vehicles on Indian roads by 2050, environmentalists have warned that the influx could greatly increase environmental degradation in a country that is already the world's third-biggest emitter of green house gases.

In recent years, Indian policymakers have tightened fuel emission and efficiency standards to promote green technologies and cut dependence on fossil fuels.

Although the prices of the cars on display were not revealed, basic electric models cost upwards of 400,000 rupees (7,600 dollars) or nearly three times the cost of the cheapest car, Tata's Nano.

Kapur said a main challenge was prohibitive costs as price-conscious Indians place a high premium on affordability.

Other key challenges lay in providing the infrastructure, including setting up a network of charging ports and filling stations.

Although the government has established a National Mission Plan for Electric and Hybrid Vehicles, there were no incentives or subsidies yet to manufacturers investing in the local production of eco-cars, said car expert Ranojoy Mukherji.

'There is no clear roadmap and there's a big question on whether these hybrids and electrics with expensive technologies can be mass produced,' he said.

'We can see more fuel-efficient cars but it will be a long while before we see a truly green car with zero-emission mobility.'

An estimated 100,000 electric vehicles are sold in India each year, and studies say there could be 7 million electric vehicles on the roads by 2020, which would require an investment of more than 4 billion dollars.

Mahindra, which acquired the domestic Reva electric car company, has plans to introduce five new electric cars.

Bhavya Sehgal from Evalueserve research said the aggressive adoption of environmental standards along with rising fuel prices was driving the introduction of not only fuel-efficient vehicles but also those ones based on alternate fuel and propulsion technologies.