The Delhi government has approved the Electric Vehicle Policy 2.0, allocating ₹15,000 crore to ensure 95% of new vehicle registrations are electric by 2027. Effective July 1, the policy introduces direct subsidies for electric two- and three-wheelers and includes scrappage incentives. This aggressive roadmap shifts the focus toward fully electric models while excluding hybrid vehicles from tax benefits.
What Happened
The Delhi government has cleared the Electric Vehicle (EV) Policy 2.0, a major update aimed at transitioning the city's transport sector to electric power. The state has earmarked ₹15,000 crore to be spent over the next four years to drive this transition. The primary goal is to reach a stage where 95% of all new vehicle registrations in the national capital are electric by 2027. This initiative, which begins on July 1, introduces financial incentives and strict registration mandates to replace fossil fuel vehicles.
Subsidies and Scrapping Incentives
To encourage faster adoption, the policy provides direct monetary support. Buyers of electric two-wheelers will receive a subsidy of ₹30,000, while those purchasing electric three-wheelers will get ₹50,000 in the first year of the policy. Additionally, the government is incentivizing the removal of older, polluting vehicles from the road. Owners of older Bharat Stage-IV (BS-IV) four-wheelers can claim a ₹1 lakh incentive if they scrap their vehicle, a move aimed at reducing city pollution levels.
The Shift Toward Pure Electric
One of the most significant aspects of Policy 2.0 is the exclusion of hybrid vehicles from tax waivers. By choosing not to offer support for hybrids, the government is signalling a clear preference for battery-electric vehicles over transitional technologies. This is a crucial distinction for manufacturers and consumers, as it forces the market toward fully electric options. The policy also includes a phased timeline for mandatory registration shifts: starting January 1, 2027, only electric autorickshaws will be registered, followed by a ban on new petrol and diesel two-wheeler registrations beginning April 1, 2028.
Impact on the Auto Sector
The two-wheeler and three-wheeler segments are the most active in India's EV market. Major manufacturers have invested heavily in building EV capacity. This policy provides a clearer, long-term roadmap for these companies. However, the move away from hybrids could influence product strategy for automakers who have been balancing hybrid and EV investments. With the government’s timeline, companies will need to accelerate the production of affordable electric models to meet the expected rise in demand from Delhi buyers.
Potential Risks and Challenges
While the financial incentives are significant, the success of this policy depends on several operational factors. The availability and reliability of charging infrastructure remain the most critical challenges. For the 95% target to be met, the installation of public charging stations must keep pace with the increase in vehicle sales. Additionally, grid capacity in residential and commercial areas will need to handle the increased power demand. Investors and stakeholders should also consider that consumer price sensitivity remains high; if the cost of battery-electric vehicles does not drop sufficiently, the shift might face hurdles despite subsidies.
What Investors Should Track
Moving forward, the key monitorables include the pace of charging infrastructure rollout in Delhi and monthly EV registration data. Investors may also track how manufacturers adjust their product portfolios to align with the push for pure EVs over hybrids. The effectiveness of the scrappage incentives will also be an important indicator of how quickly older, high-polluting vehicles are taken off the streets.