Are Government Electric Vehicle Support Schemes Fading?

Are government electric vehicle support schemes fading?
Are government electric vehicle support schemes fading?

Over the last few days we have seen some mixed comments emerging from the electric vehicle market and today's news that Mahindra & Mahindra is cutting back on the launch of new electric vehicles in the short term, is starting to concern some people. The Indian-based company was allegedly promised an array of financial support from the Indian government although unfortunately this does not appear to have been delivered. As a consequence, the company is now looking to slow down its rollout of electric vehicles. But is this just a move to put pressure on the Indian government?

When you look at other major electric vehicle markets around the world, such as the U.S. and UK, all governments are heavily supporting buyers of new electric vehicles. This is something which has in many cases been the catalyst to significant sales growth and while the Indian market itself is enormous it will also require some kind of incentive for first-time buyers.

Indian authorities

While today's news from Mahindra & Mahindra was hot on the heels of a 4.6% increase in consolidated net profit for the quarter which ended September 2013, it has not as yet prompted a response from the Indian government. When you bear in mind the enormous market in India it would seem almost suicidal for the authorities not to deliver on previous promises of financial support. The fact is, that employment opportunities alone make this a very interesting opportunity for the authorities and it could in the future become a major element of the worldwide electric vehicle market.

Quote from ElectricForum.com : "There are some very interesting development in the world of EVs with rumors of new technology, more focus on charging stations and a promise of an affordable EV from Tesla within 4 years. With this in mind when do you expect to see full EV market penetration?"

Interestingly, Mahindra & Mahindra is now looking to focus upon the likes of the UK, Norway and Denmark while the Indian situation is resolved. These are all markets which have been extremely strong of late and indeed yesterday's news of record sales in the UK was perfectly timed. Again, it seems highly unlikely that the Indian authorities will stand aside and let other areas of the world build up a greater presence in the EV market.

Financial incentives still important

Despite the fact that we have seen record sales of electric vehicles around the world the industry is growing and technology is improving but we are not quite at the stage where the industry can support itself. There will be a requirement for government financial assistance in all areas of the world for some time to come although at some stage the roles will be reversed and new taxes and income streams, revolving around electric vehicles, will be introduced.

While there may be a wave of concern about future taxes, which are inevitable, the fact remains that governments around the world do need to see a return on their significant investment of late. This will likely take the form of improved employment opportunities and direct taxes from electric vehicle owners - it will be interesting to see exactly what form this takes.

Conclusion

In the short to medium term government financial support is still vital to ensure the electric vehicle market eventually makes it to the promised land, i.e. the mass market. It was disappointing to see the Indian authorities apparently reneging on promised financial support although the fact that Mahindra & Mahindra is now able to look overseas to make up the shortfall in sales perfectly illustrates the global strength of the EV industry.