The government may consider providing incentives or support initiatives to convert older vehicles to electric vehicles instead of scrapping them, a report said on Thursday.
Converting internal combustion engine-powered vehicles to electric vehicles through retrofitting faces several challenges, according to a joint report by management consulting firm Primus Partners and ETB (European Center for Trade and Technology).
However, with a coordinated approach involving government initiatives, industry collaboration and public participation, these challenges can be effectively addressed and overcome, it said.
India’s vehicle scrappage policy aims to phase out old and unfit vehicles and replace them with newer and more environment-friendly vehicles.
The policy is governed by various factors including the fitness and emission levels of the vehicles rather than just their age.
Commercial vehicles older than 15 years and passenger vehicles older than 20 years are subject to increase in re-registration fees or scrapping under this policy.
“Instead of scrapping older vehicles, governments can provide incentives or support initiatives to electrify older vehicles. This way, the lifespan of existing vehicles is extended,” the joint report said.
Furthermore, retrofitting could also offer a route to modernizing existing vehicle fleets, while also reducing emissions and aligning with broader sustainability goals of a circular economy, the report said, It is titled ‘Retrofit for a Green Future: Accelerating Electric Vehicle Adoption’.
Emphasizing that retrofitting is more than a temporary solution, the report says it is an important step towards sustainable mobility, demonstrating a commitment to environmental stewardship.
According to the report, by 2023, the global retrofit vehicle market is estimated to be worth US$65.94 billion and is projected to reach US$125.37 billion by 2032 with a compound annual growth rate of 7.40 percent.
Noting that retrofitting generally provides quicker ROI (return on investment) across all types of vehicles than buying new EVs, the report said that in the case of medium-duty trucks, the break-even for retrofitting The point is achieved in about five years. Compared to about 8 years for new electric vehicles.
It said this rapid attainment of break-even is driven by substantial annual fuel savings, which contribute significantly to recouping retrofitting costs.
Similarly, as per the report, for buses, break-even for retrofitted electric vehicles is reached in about four years, which is significantly faster than the eight years required for new electric vehicles.
As India moves forward in its commitment to the Paris Agreement and its own Nationally Determined Contributions (NDCs), it has become important to foster a strong EV retrofitting ecosystem. Market analysis shows that the retrofitting sector is still in its infancy. The report said it shows significant potential for expansion due to its technical simplicity and accessibility.
