On January 18, the government of the southern state of Tamil Nadu — home to Chennai, which is called the “Detroit of India” for its auto manufacturing prowess — took out a front-page ad in The Economic Times declaring that the state was the country’s preeminent “EV capital” and boasting $2.5 billion in investment commitments from electric vehicle (EV) manufacturers like Ola Electric, Ather Energy, and TVS Motor. The ad also invited other companies to set up factories on a 300-acre plot of land set aside by the state government for developing an e-mobility park.
While it’s common for Indian state governments to boast in ads, this one felt pointed: In addition to appearing in the Tamil Nadu edition of the paper, the ad also appeared in Karnataka, a neighboring state also vying for the title of “India’s EV capital.” In 2020, Karnataka received a “rude shock” when ride-hailing company Ola chose Tamil Nadu over the state to set up its $312 million e-scooter factory.
“The ad was, of course, to send out a message,” said Pooja Kulkarni, the CEO of Guidance Tamil Nadu, a government agency focused on investments in the state. “[We want] to thank all our partners who’ve invested. We are quite proud to be in partnership with all these investors who repose their faith and confidence in the state, and we wanted to make a statement of that.”
As India moves towards its pledge to cut emissions to net zero by 2070, investments in the EV sector across the country are on the rise, and many states want a share of the industry that comes with it. These states have been in a race for the title of India’s “EV capital.” In the past two years, over 15 Indian states have rolled out EV policies that include perks like tax subsidies, cheaper land, and charging and battery infrastructure. The big question remains: Which state will be conferred the vaunted status of India’s EV capital?
According to analysts tracking the electric mobility sector, the front runners are Delhi, Karnataka, Tamil Nadu, Uttar Pradesh, and Maharashtra, which have all made ambitious promises to promote investment in manufacturing and increase the share of electric vehicles on their roads. “All the states are trying to do their best, and these five states are in equal competition,” said Trupti Deshpande, a senior research analyst at the Center for Study of Science, Technology and Policy (CSTEP). “One state has high EV sales, another has high manufacturing. If you have to actually call a state [an] ‘EV capital,’ there has to be a proper guideline.. on which it has to be assessed.”
The Delhi boosters, for instance, claim the city as the EV capital because it has the highest national average of EV sales. As the world’s most polluted capital, the city has prioritized EV subsidies for two- and three-wheelers, the greatest sources of vehicle pollution. For specific EV models, the Delhi government has been subsidizing purchase costs by up to 50%, which has been a huge boost to EV adoption, according to Jasmine Shah, vice chairperson of the Dialogue and Development Commission of Delhi, a state government think tank. “Within seven days of buying an electric vehicle, the state government puts the money into your bank account or the subsidy that you are eligible for. It is a very smooth process,” Shah said.
In India’s plodding bureaucracy, coordinating between landowners, utilities, and charging point providers can make procuring permission to install chargers a challenge. To streamline that process, the Delhi government aggregated 100 land parcels from 16 agencies and issued tenders for the private sector to bid on setting up charging stations. “The tender covers 100 charging stations and close to 500 charging points, and all of these are at some of the most prime spots in Delhi,” Shah said. Delhi’s tendering blueprint is now being promoted by the federal government for adoption by other states, Shah said.
In addition, Delhi rolled out a government website where mall owners, housing societies, and theater owners can apply for and set up charging facilities. Using the site, organizations can pay just 2,500 rupees (around $33) for a 3.3-kilowatt LEV AC (light electric vehicle alternating current) charger rather than the 8,500 rupees (around $112) on the open market.
As of February, 10% of all vehicles sold in Delhi are electric. “Delhi has pulled ahead of all the other states,” Shah said. Delhi aims to have 25% of new vehicles registered annually to be electric by 2024.
But government officials in the southern state of Tamil Nadu believe success in EV adoption should be measured in terms of capital investment. Since the launch of its 2019 EV policy, “about 35% of the total EV investments that have happened in India have come to Tamil Nadu,” said Kulkarni of Guidance Tamil Nadu. “We are ahead of other states, but we need to work harder,” Kulkarni said. “There’s a stiff competition, so we can’t just rest on our couches and say that we are ahead of the game.”
The state leads in attracting investments for a range of electric vehicle projects, from two-wheeler factories to battery manufacturing units. Ola’s factory was a big win for the state, given that the SoftBank-backed company has claimed the new facility will be the world’s largest two-wheeler factory. The government of Tamil Nadu secured the deal by offering the startup 500 acres for its facilities in record time.
“We had land readily available and the land was very reasonably-priced,” Kulkarni, who was a part of the Ola negotiations, told Rest of World. She refused to disclose specifics about the subsidies and incentives offered. “I think the proactive attitude in engaging with them probably swung the deal finally.”
For Tamil Nadu, Kulkarni said, the urgency to become the “EV capital” stems from a concern that the traditional auto manufacturing industry may be made irrelevant in an increasingly electrified world. Tamil Nadu has been a mainstay of traditional automobile manufacturing in India for decades. Both BMW and Hyundai have manufacturing facilities in the state and employ thousands. One in two cars exported from India is manufactured in the state, Kulkarni said, creating a sprawling component-manufacturing ecosystem. That’s under threat with the rise of EVs. “We saw the EV wave coming and we realized that this will quickly hit us if we don’t start creating that ecosystem here,” said Kulkarni of Guidance Tamil Nadu. “The entire sector is at risk,” said Kulkarni.
Tamil Nadu also has a thriving tech manufacturing center: the state is home to Apple contract manufacturer Foxconn, and last year Taiwanese electronics manufacturer Pegatron announced that it was setting up facilities in the state as well. Kulkarni said the state’s tech hardware facilities could be a boon for EV manufacturers coming to the state. “EV is, ultimately, some electronics on wheels,” Kulkarni said. “Since we have a very robust electronics ecosystem, we were in a position to leverage upon that in terms of skills, and in terms of supply ecosystems.”
Losing out on the Ola investment pushed Karnataka to amend its 2017 EV policy, introducing incentives such as heightened tax reimbursement on land, production-linked subsidies, and a training stipend for employees. “We are hoping these amendments will be comparable to the sops which are being offered in Tamil Nadu, if not better,” Basavaraj Bommai, law and parliamentary affairs minister told The Times of India in 2021.
Karnataka was widely regarded as the state with a clear lead in wooing the electric vehicle industry. The state rolled out the country’s first EV policy, and houses manufacturers such as Ather Energy and Bosch. The world’s-largest EV maker, Tesla, incorporated a local office in the state in 2021. But since the announcement, restrictive tax policies have neither allowed Tesla to sell imported cars nor set up a local production factory. This prompted a tweet earlier this year from Tesla’s mercurial founder Elon Musk: “Still working through a lot of challenges with the government.”
Despite the surge of investment, India is still woefully behind in hitting its 2070 climate targets. The government’s ambitious Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) scheme, meant to promote EV adoption, has achieved only 10% of its stated targets, according to the Society of Manufacturers of Electric Vehicles. The FAME II scheme had planned to support a million electric two-wheelers, 500,000 three-wheelers, and more. Fewer than 1,700 public charging stations exist across India, and consumers are reluctant to purchase EVs due to range anxiety and the severe lack of charging centers.
Being the “EV capital of India” is not something that states can simply proclaim, said Deshpande of CSTEP. There is no data-based approach to make that assessment yet, Deshpande said, and in the future, describing any state as the EV capital should be based on metrics such as the state’s GDP, promised investments, impact on the emissions, and peoples’ lifestyles. “I don’t think any state, as of now, can call itself [the] EV capital,” she said.