Wheels of Change: Electrifying Hyderabad's Fleet

NRDC India

This blog was authored by Divyansh Khare and Sahana L of NRDC India

Vehicle fleets are the driving force of the transportation industry-everything from the food we eat to the clothes we wear depends on fleets, which crisscross the country to bring people and things to where they need to go. Electrifying fleets, therefore, has the potential to transform industries, improve public health and support the country's climate goals. In India, the state of Telangana has listed vehicle decarbonization as a fundamental step to reaching its climate objectives. As a follow-up to the first stakeholder consultation on Fleet Electrification last year, NRDC and the Administrative Staff College of India (ASCI) have held multiple discussions with industry players and conducted in-depth research analysis to formulate informed strategies for fleet electrification target in Telangana. On October 19, NRDC, ASCI, along with Telangana Mobility Valley under the Industries & Commerce Department, Government of Telangana, organized a workshop to bring together stakeholders to leverage collective expertise to develop a scalable and sustainable pathway for commercial fleet electrification in Hyderabad, and contribute to a cleaner, greener future.

Telangana is at Crossroads of Transport Decarbonization

All states in India are growing quickly, but Telangana has experienced an economic growth rate of 12.5%, which is 2 percentage points higher than the national average. Urban areas have seen significant growth in population and economic activity, leading to increased mobility and a rising demand for goods and services. This growth has resulted in greater vehicle usage-over the past decade, Telangana's total motor vehicles have risen from 7.07 million in 2014 to 16.56 million by May 2024. This represents an annual growth rate of 9%, significantly outpacing the national average of 3.32%. The rise in vehicle use has also led to an increase in associated emissions, with the transport sector accounting for approximately 19.55% of the state's total emissions. Within the transport sector, two-wheelers account for 56.2%, followed by trucks at 18.85% and four-wheelers at 14% of the total transport emissions.

With this background, the Telangana Electric Vehicle & Energy Storage Policy 2020 - 2030 was launched in September 2020, with the goal of making the state's transportation system more sustainable and eco-friendly. Last year, the state also introduced the pioneering Telangana Mobility Valley (TMV) initiative, whose goal is to attract approximately INR 50,000 crore in investments and create over four lakh job opportunities within the upcoming five years. Notably, the state has achieved substantial success on the supply side, with the successful establishment of a robust manufacturing base and the attraction of investments exceeding INR 8,000 crores.

With a robust supply-side ecosystem in place, electric vehicle (EV) penetration in Telangana has gained substantial momentum, rising to 5.40% in FY 2023-24, up from just 0.2% at the onset of the policy in November 2020. Telangana now ranks 12th among Indian states in new EV sales, accounting for 3.12% of the market. The city of Hyderabad has also experienced significant growth in vehicle sales across various segments. Notably, EV penetration across different segments increased from 0.62% in FY 2020-21 to 8.02% in FY 2023-24.

Graph 1: Growth of EV Penetration in Hyderabad

Road Ahead for Electrifying Fleets in Hyderabad

Eight Indian states so far have fleet electrification goals mentioned in their respective EV policy. Delhi was the first state to set year-wise targets and these states offer a valuable lesson: clear targets and strict timelines foster a sense of direction and market certainty. This clarity encourages both public and private stakeholders to take swift action for accelerating EV adoption. Collaborative efforts between governments, industry players, and experts can foster innovation and create an environment conducive for fleet electrification.

To support its transportation decarbonization goals, Telangana, with support from NRDC, ASCI, and TMV is developing a fleet electrification roadmap which sets EV adoption targets across vehicle segments, expected to be released in early 2025. Proposed targets were the culmination of a year-long development and engagement process, as outlined in the graphic below.

Target Development Process

Final Stakeholder Meeting Takeaways

On October 19, 2024, NRDC and partners shared the proposed targets for fleet electrification with more than over 25 industry stakeholders in Hyderabad as part of the second and final stakeholder meeting in this process. The primary goal of the meeting was to gather industry perspectives on the proposed targets and the implications of total cost of ownership (TCO) in the electric vehicle sector. Participants provided valuable insights on fleet electrification targets for the GHMC area. Key takeaways include:

• The majority of aggregators were aligned with the proposed fleet electrification targets.
• As EV adoption increases, more EV driver partners will be onboarded onto these platforms. This will allow fleet aggregators to meet the electrification targets.
• Key recommendations for the state government were to provide support for financing of EVs (interest subvention schemes), expand charging infrastructure across the city by setting up charging hubs, improve after-sales service, provide waivers on lifetime road tax for EVs and scrappage incentives to purchase EVs in lieu of the scrapped ICE vehicles.

Next Steps: Complementing Fleet Electrification Targets with Supply-Side Measures

Fleet operators in cities are grappling with issues such as lack of affordable EV models in the market, high upfront cost of EVs, longer wait times for EV purchases since demand exceeds the supply, lack of financing options and inadequate charging infrastructure. Evidence shows that that demand incentives alone cannot translate into widespread EV adoption. Supply-side measures-either performance-based standards (emission standards and fuel consumption standards) and zero-emission vehicles (ZEV) mandates or sales targets-imposed on vehicle manufacturers to promote the sales and production of ZEVs, would complement fleet electrification targets in boosting EV purchases. Supply side measures could provide market certainty, lead to improvement in ZEV model availability and affordability, result in systematic development of supporting infrastructure and attract more investments for ZEV manufacturing in the state. To complement the fleet electrification and EV penetration targets, NRDC and ASCI initiated a dialogue with the industry stakeholders on developing such supply side measures for Telangana, which could provide additional and support for the growing ZEV Industry in the state and across the country.

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