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How will the decrease in the petrol prices affect the electric vehicle market?

The petrol prices have been allowed to be deregulated and can fluctuate along with the prices of oil. The crude oil prices are rising and our rupee is weakening, which makes it even harder on the country’s coffers. The presence of running electric vehicles have made a dent in the petroleum demand.

Decrease in petrol prices

An abatement in the cost of gas implies vehicle proprietors have increased the extra cash to use for different buys. Proprietors who may have been attempting to loosen up the lifetime of their vehicle may simply conclude that the additional pay they spare from lower fuel costs can be utilized to acquire another vehicle now. For the individuals who couldn't manage the costs of vehicle proprietorship, low fuel costs make driving significantly less expensive and thus, vehicle possession turns out to be substantially more appealing.

The electric vehicle market has been growing in India after Mahindra and Mahindra made its first-ever electric car, REVAi and launched it in the year 2011. The need for electric vehicles due to their less polluting properties has forced the Government of India to take initiatives on increasing its demand. The government is providing the manufacturers of the electric vehicles and their infrastructure providers with various incentives in the form of subsidies, so as to complete its goal of making the Indians use the electric motor vehicles by the year 2030. It is one of the reasons why the government isn’t reducing the prices of petroleum products.

An extended fall in oil prices will reduce this incentive and encourage firms and consumers to stay with oil. Falling oil prices could defer the investment into alternative ‘greener’ forms of energy, such as electric cars, thus affecting the electric motor industry and this could have negative results. Long-term falling oil prices could turn around the ongoing decrease in-car use, leading to a consistent increment in traffic congestion and environmental costs of petroleum use.

Decrease in petrol prices

The electric motor industry is an industry that will be able to take a bite off the oil demand. The Economists of India have studied the present scenario quite well and do acknowledge that if the petrol prices decrease then the electric motor market is going to be affected the most. The people, for sure, will start to prefer petrol and diesel-run vehicles as compared to electric ones, because the maintenance of such vehicles is cheaper as compared to electric-run ones. They will indulge themselves in buying petrol-run vehicles as compared to the latter. This isn’t the only result of such a decrease in the price. There are more challenges that such companies are going to face. In spite of the subsidies provided by the government, the producers, as well as the consumers, won't be able to make any profit because the sale will reduce for the producers and a cheaper mode of transportation shall be present in front of the eyes for the consumers.

The Government of India has taken initiatives to increase the production as well as usage of electric motor vehicles under the FAME (Faster Adoption and Manufacture of (Hybrid and) Electric Vehicles). However, on the other hand, it is also controlling the cost of petroleum products, mainly petrol and diesel. The stock prices of the electric motors will stop rising, come to a halt and might start to reduce at some point of time too. This might also result in the companies not opting for manufacturing more of their electric motor vehicles and they’ll start backing off. People will start using petroleum products recklessly as a result of which, the rate of depletion of such products will start increasing logarithmically and a day will come where there will be a shortage of petroleum products.

Decrease in petrol prices

In Economic theory, the utilization of integral products is related to the utilization of another great, while substitute merchandise is merchandise seen by customers as comparative or equivalent here and there. Inside the automobile business, vehicles and oil are viewed as complementary products though gas-swallowing trucks and SUVs are comparative enough to their smaller, more eco-friendly partners, to be viewed as sensible substitutes. Understanding these two unmistakable classes of products is useful in pondering, how value changes influence the interest in various sorts of merchandise. With the critical decrease in the cost of oil over the previous years, this qualification is fundamental in seeing how the vehicle the business has and will be affected with the down oil request. However, governments are probably not going to stand aside and watch nurtured sustained enterprises breaking down, particularly those that need more energy independence and less air pollution. The cost was never the primary motive for pushing consumers into cleaner vehicles, and there are different approaches to secure EV moderateness: tax, green credits, etc.

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