Partnership for Clean Fuel & Vehicles : (Side event, BAQ ) December 18th, 2002 Need for a partnership to promote alternate fuel vehicles N.V.Iyer Bajaj Auto Ltd, Pune, India

Partnership for Clean Fuel & Vehicles : Role of Bajaj Auto in the AFV Programme ABOUT BAJAJ AUTO: Installed capacity of 1.8 million vehicles annually, spread over three facilities in western India Offshore assembly at Colombia, Bangladesh, Sri Lanka Sales turnover of ~ US $ 1 billion Domestic market share ~30% in 2- wheelers (~1.2 million vehicles) & > 75% in 3-wheelers (~0.25 million vehicles) Three wheeled vehicle portfolio includes 3-passenger (+driver) auto- rickshaws and small goods vehicles ROLE IN AFV PROGRAMME –Invested in the development of advanced AFV’s: CNG 3- wheelers, LPG 2 & 3 wheelers & Electric 2 & 3 wheelers –Regularly produces CNG 3- wheelers that are safe, durable and available at least cost –Works with the energy industry to develop appropriate specifications for alternative fuels –Works with the regulatory authorities to develop safety specifications

Partnership for Clean Fuel & Vehicles: Concerns About the AFV (CNG/LPG) Programmes CNG Uncertain future : no clear plans to promote CNG and create supply network across the country Assurance of supply : CNG programme implemented in Delhi under Supreme Court orders. No assurance of adequate supply of gas in future Uncertain fuel price : CNG prices may not remain as low as now if it is to be imported to meet increasing demand LPG Uncertain future: Increasing demand (due to use in automobiles) may lead to shortages and drive up the prices Assurance of supply Government notifications allow the use of LPG as an auto fuel but there are hardly any LPG filling stations - no clear plans Uncertain fuel price LPG for kitchen use attracts a large subsidy (price -US$ 0.34/kg, subsidy ~ -US$ 0.20/kg). Auto LPG price based on market forces, likely to be higher and variable. Users may not be attracted to LPG.

Partnership for Clean Fuel & Vehicles: Bajaj Auto 3-Wheeler (ECO-RICK) Pricing Ex-factory Price (Delhi) Petrol: $1,710 EV : $3,500 including 2 battery packs Energy cost (Life Cycle basis) Petrol: 2 ¢ /km EV : 1.8 ¢ /km ( including provision for battery replacement) PRICE AND ENERGY COST OF 3-WHEELER (ECO-RICK) DEVELOPED BY BAJAJ AUTO

Partnership for Clean Fuel & Vehicles: Concerns About the EV Programme UNCERTAIN MARKET DEMAND Difficult to project possible market demands Necessitates inefficient low volume manufacturing Leads to high product cost (more than twice the cost of ICE vehicle) ASSURANCE OF ‘FUEL’ SUPPLY Long charging times (over 8hours) and absence of battery charging infrastructure are major concerns for users Need for periodic battery replacement adds to running costs and low user acceptability ABSENCE OF LONG TERM STRATEGY Promotion of EVs possible only through major policy interventions and government support by way of mandates and incentives

Partnership for Clean Fuel & Vehicles: Partnership required among stakeholders to promote Electric Vehicles GOVERNMENT Formulate strategy with plans for the short, medium and long terms Provide start-up financial help to manufacturers Institute a logical taxation regime - collect no more in total revenue than from similar conventional vehicles Initiate demonstration programmes to develop public awareness and overcome a natural hesitation to adopt new technologies UTILITIES Provide electricity at lower tariffs for night time charging of batteries Assure uninterrupted supply good quality electricity VEHICLE MANUFACTURERS Make efficient EVs available with suitable warranties on all components Set up facilities for maintenance & up- keep of vehicles. PRIVATE SECTOR Set up infrastructure for charging and maintenance of batteries Maintain a stock of batteries and renting out batteries to operators FINANCING AGENCIES Provide finance to vehicle operator at concessional rates