Everything you need to know about electric vehicles & motor insurance

All you need to know about electric cars & vehicles – their advantages, government incentives & insurance plans.

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The future of the automotive industry in India looks electric! Sure, battery-powered vehicles have been around for a while now, but they have not created much of a spark…. until now!

Today, the market for electric vehicles, affectionately known as EVs by motoring enthusiasts, is extremely conducive. Massive Government encouragement, the rising cost of conventional fuel & a 73% drop in battery prices since 2010 have combined to flip the switch on electric & hybrid vehicles in India.

What are electric & hybrid vehicles?

Electric vehicles refer to cars, bikes, and other vehicles that run on battery-powered motors instead of an internal-combustion engine.

Hybrid vehicles, on the other hand, make use of both battery-powered and conventional engines to drive the vehicle.

Both electronic & hybrid vehicles have way lower emission levels than conventional vehicles. This helps reduce the amount of greenhouse gasses in the atmosphere.

Operational costs of EVs are also way lower - it costs less than half as much to travel the same distance in an EV than a conventional vehicle. Some studies have shown that the running cost of an EV could be as low as Rs 1.1/km.

EVs are also extremely quick – newer models are known to accelerate from 0 to 100 kilometres per hour in less than 3 seconds.

They are also very, very quiet – sometimes it’s hard to tell if the vehicle is on or not. This is why many manufacturers now fit artificial motor sounds in electric vehicles. This gives you the feel of driving a normal car and also alerts pedestrians to the presence of the vehicle.

What are the advantages of e-vehicles for India?

Just the production of electronic vehicles and their components is set to increase the GDP in the manufacturing sector to 25% by the year 2022.

Further, a large scale adoption of e-vehicles could also help save $60 million in oil imports in the next 10 years (i.e. by 2030). And finally, a study in 2017 showed that close to 3% of the GDP is lost due to air pollution – electric vehicles should help reduce this number significantly.

Electric vehicles get the push they deserve

Not too long ago, our honourable Prime Minister Narendra Modi launched the FAME Scheme (Faster Adoption & Manufacturing of Electric Vehicles) as a part of an overall objective to make India an EV-only country by 2030.

This gave e-vehicles in India a much-needed impetus. Under this scheme, electric & hybrid vehicles are set to enjoy several incentives including exemption from road tax, registration fees, and parking charges.

Under phase two of this scheme (FAME-2), the government provided sanctions for setting up 2,636 charging stations all over India. This will provide a total of 14,000 charging points. Out of all these charging stations more than half of them (1,633) will be fast charging enabled.

Also part of FAME-2 was the announcement to subsidise the purchase of 10 lakh electric two-wheelers, 7000 buses, and 55,000 electric and hybrid passenger cars over a 3-year period starting from April of 2019. Until April 2020 - 2,300 electric cars, 13490 two-wheelers, and 600 busses had received this subsidy.

Electric vehicles & motor insurance

This is another sector where electric vehicles have been given a much-needed incentive. Until recently, there was no separate motor insurance for electric cars & two-wheelers. But that changed in June 2019 when the IRDAI notified premium rates for third-party insurance on electric vehicles.

The best part is that the premium rates for EVs are discounted as compared to rates for normal private cars & bikes of similar categories.

However, when it comes to comprehensive cover, electric cars are covered under the traditional motor-insurance policies applicable to petrol and diesel cars. In this case, premiums will be as per the IDV of the car.

Of course, there are several ways to reduce the premium of your bike or car insurance policy. Moreover, you can enjoy up to 50% discount if you do not make a claim against your policy through the No Claim Bonus. The subsidies & the low running expenses of an EV should help you quickly make up for the upfront cost of insurance.

Further, motor insurance plans that are specific to EVs could be more affordable in the future and help you save even more money on an electric or hybrid vehicle.

Therefore, if you are planning on buying a new car or two-wheeler, it makes sense to consider electric or hybrid options.

It is not only better for the environment but can also be economically more viable in the long run.

You can avail a number of benefits including subsidies on the purchase, better finance options, lowered motor insurance premiums and exception operational cost.

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