Mahindra's e2oPlus, operated by Indian ride-hailing company Ola, in Nagpur, India. Picture: REUTERS/ADITI SHAH
Mahindra's e2oPlus, operated by Indian ride-hailing company Ola, in Nagpur, India. Picture: REUTERS/ADITI SHAH

New Dehli — India plans to order taxi aggregators such as  Uber and Ola to convert 40% of their fleet of cars to electric by April 2026, according to a source and records of government meetings to discuss new rules for clean mobility.

Uber and Ola, both backed by Softbank, would need to start converting their fleet as early as 2020 to achieve 2.5% electrification by 2021, 5% by 2022, 10% by 2023 before hiking it to 40%, according to the person and the records.

Some taxi players, such as Ola, have previously attempted to operate electric cars in the country, but with little success given inadequate infrastructure and high costs.

New Delhi, however, is looking to push the new policy to boost the adoption of electric vehicles (EVs) as it tries to bring down its oil imports and curb pollution so it can meet its commitment as part of the 2015 Paris climate change treaty.

Indian think-tank Niti Aayog, chaired by Prime Minister Narendra Modi and which plays a crucial role in policy making, is working with several ministries on the EV policy.

The recommendations will eventually become a formal policy, with or without changes, subject to approval by the federal government, the source said, adding that the idea is to “push electrification through public transport”.

Neighbouring China, home to the world’s top vehicle market, is leading the world in electrification by setting tough EV sales targets for car makers and offering incentives to taxi operators to increase their fleet of clean-fuel cars.

EV sales in India grew threefold to 3,600 in the year ended March but still account for about 0.1% of the 3.3-million diesel and petrol cars sold in the country over the period, industry data showed. China’s electric car sales, meanwhile, rose 62% in 2018 to 1.3-million vehicles.

Gradual shift

In a meeting in New Delhi on May 28, Niti Aayog officials and the ministries of road transport, power, renewable energy and steel, as well as the departments of heavy industries and trade, were among those recommending taxi operators in India gradually convert to electric.

They recommended that all new cars sold for commercial use should only be electric from April 2026, a change that would also apply to Uber and Ola, said the person, who has direct knowledge of the matter but spoke on condition of anonymity.

Motorcycles and scooters sold for commercial purposes, like food delivery or for use by e-commerce companies, will also need to be electric from April 2023, the person said.

India has seen a boom in food delivery apps like Zomato and Swiggy, which counts Naspers and Tencent as investors. Sales by e-commerce firms like Amazon.com and Walmart-owned Flipkart are also rising.

The committee has suggested a plan to gradually introduce electric buses within cities, with 5% of the fleet electric by 2023, rising to 30% by 2026. Thereafter all new city buses would need to be electric.

Companies like Tata and Ashok Leyland manufacture buses for intracity travel in India.

The EV proposal comes weeks after the interministerial committee recommended electrifying most motorbikes and scooters for private use and all three-wheeled auto rickshaws within the next six to eight years.

While there are several electric scooter manufacturers in the country including Ather Energy, Hero Electric and Okinawa, there are only two car makers that build and sell electric cars — Mahindra & Mahindra and Tatas.

Some taxi operators have so far had little success operating electric cars in India. Ola launched a pilot project in the central Indian city of Nagpur in 2017, but a year later drivers, unhappy with long wait times at charging stations and high operating expenses, wanted to return to petrol cars.

Ola, however, is not giving up yet.

Its electric mobility unit in March raised 4-billion rupees ($58m) from investors including venture capital funds Tiger Global and Matrix Partners. It also raised $300m from Hyundai Motor and Kia Motors and formed a strategic partnership with the South Korean duo to help build India-specific EVs.

Modi's government in 2017 had set an ambitious target to electrify new cars and utility vehicles by 2030 but resistance from the industry forced it to scale back the plan.

Reuters