Key Messages

Decarbonisation of the transportation sector—the world’s second highest contributor to greenhouse gas (GHG) emissions—is critical to mitigate climate change. Most European and North American nations and China have settled on vehicle electrification as the best GHG reduction strategy.

The Government of India, too, has provided subsidies for electric cars (e-cars), but whether their adoption is the best way to decarbonise the transport sector requires further exploration.

Our analysis showed that emissions related to e-cars, even with India’s coal-based grid, are currently about 35% lower than those related to their conventional counterparts, indicating that subsidies for e-cars to date have been beneficial. However, compared with the alternatives described, the current high-cost pertaining to the 35% emission reduction (about Rs 10 lakh per vehicle with the subsidy) makes the cost per tonne of GHG reduction very high in the near term. In the future, the GHG benefits of e-cars will increase as the grid becomes cleaner and with the expected fall in battery costs. Until then, a mix of alternative approaches can provide similar GHG reductions at lower costs and be much more appealing to customers over the next 10 years.

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