It's happening. Delhi is witnessing a change, slow perhaps, but nonetheless increasingly visible. Like alternative fuels, which brought a positive change in mobility, electric vehicles are now gaining greater acceptance. Compressed natural gas (CNG) changed the basic transportation in the Capital and close to 10% of private cars run on it now. Then came Liquefied Petroleum Gas (LPG), making its mark as an easily storable and compact auto fuel used by a substantial private vehicles owners.

Now, it's electric vehicles that are slowly making waves in Delhi. They are the cheapest mode of transport. Hold your breath--two wheeler run at a highly affordable cost of 10 paise per km, while for cars the figure is around 40 paise! There's more: an added advantage is electric two wheelers don't require any registration or driving license under the current motoring policy of the government. Though electric car do need all the legal procedures followed by other vehicles.

While many may argue electric vehicles are a non-starter due to low speed and short travelling range, the government has 'stepped in' to share the burden and make them popular as an emission free transport solution to tackle rising pollution and congestion.

First it was the central government, which waived the entire excise tax and now the Delhi government has taken the lead with a series of steps to push the electric vehicle bandwagon. The central government's decision to waive 8% excise is likely to bring prices down by Rs 1,800 to Rs 2,400, if the manufacturers pass on the entire benefit to the customers.

Currently, electric vehicles are priced in the range of Rs 20,000 for low speed two wheelers to around Rs 36,000 for the high-speed models. While electric car prices start from Rs 3.28 lakh, which can now be cheaper by Rs 35,000.

UK based electric vehicle maker Ultra Motors' Indian subsidiary Ultra Motors India's director (marketing) Deba Goshal said, "It will help to make the electric vehicle viable and help the industry grow. We had been facing a pinch after the excise on petrol two wheelers was brought down to 12% from 16%, while there were no changes for the electric vehicles. The 12% difference with the petrol vehicles will make a sizeable difference and boost demand in the market."

To make these vehicles more acceptable, specially to de-congest the national capital which has the highest number of vehicles in India, electric vehicle companies are also approaching the adjoining Haryana and Uttar Pradesh state governments to extend similar benefits for all such vehicles.

The Delhi government has recently announced a gross subsidy of 29.5% (15% general, 12.5% VAT and 2% road tax and registration) for each electric vehicle, which could make the cars cheaper by a lakh and two wheelers by Rs 5,000. This has prompted the Bangalore-based Reva Electric Car Company to debut in the Capital. In fact, India is amongst the few countries in the world where an electric car is manufactured and also exported.

Reva, which comes at a price band of Rs 3.28 lakh to Rs 4.28 lakh (on-road Bangalore) is expected to be priced from Rs 3 lakh. It will debut in the Delhi market at this competitive on-road price. The two-seater hatchback is expected to be cheaper than the Hyundai Santro, Tata Motors Indica and General Motors Spark, which come in the price band of Rs 3 lakh to Rs 3.3 lakh (on-road price Delhi), though these vehicles are not comparable due to their diverse benefits.

Reva Electric Car Company president Girish Rekhe told ET, "We are basically looking at introducing a new mobility concept for the Capital and will introduce Reva sometime next month. Reva is the simplest and the cheapest car to drive. We are looking at the corporate sales and institutional sector, which get huge tax and depreciation rebates on buying our car. But as it has a limited driving range of 80 kilometres. So, we will also tap the female and senior citizen market."

Reva, a battery run car which has an on-board charger to facilitate easy charging, will be opening its first retail dealership in Lajpat Nagar in South Delhi early next month. The car can accommodate two adults and two children in the rear. The rear seats are foldable to adjust cargo in the boot. It also has an optional air-conditioning system.

Customers have a choice of personalising the colour schemes with over 2,000 shades. The car runs on eight 6-volt lead acid batteries which can be charged by plugging into any 15 ampere electric socket. The 2.6-metre long Reva has a turning radius of 3.5 metres and is easy to park. The car has a maximum speed of 80 kmph and runs at a cost of 40 paise per kilometre. "It's a modern urban concept which tackles the parking and emission problems. We are not looking for great volumes but will be educating the customers on the new eco-friendly mobility concept and cheap running cost." Mr Rekhe said.

After breaking away from its UK-based technology partner Ultra Motors, Ludhania based electric two wheeler maker, Hero Electric is going on its own and marketing the new solo brand. Banking on the potential, the company, with its seven Hero Electric range of two wheelers in the market will launch four new models, including two high-speed scooters to double its sales to 70,000 vehicles in FY '09.

Hero Electric managing director Naveen Munjal said, "We are in the process of developing a strong indigenous range of electric two wheelers. We are developing new concepts based on the speed, distance and mobility requirements of customers. The technology is almost ready and the product rollout will start in the second half of this year."

The company is banking on the cheap running cost to rollout these vehicles. "We have set aside a marketing budget of Rs 50 crore to educate customers on this relative new and green technology, which has a running cost of 10 paise per kilometer. We have identified certain high potential territories for our electric vehicles. We shall be concentrating more on the western and southern regions along with small cities and towns," Mr Munjal said.

Around 1.3 lakh electric two wheelers were sold in FY '08, against the 9.8 crore petrol and diesel vehicles in the same period in India. Electric two wheelers, which formed a bulk of the total sales, mainly drove the electric vehicle industry and around 1.2 lakh were sold in the same period.

According to the Society of Indian Automobile Manufacturers' (SIAM) the market is likely to double in this fiscal and expected to reach over a million vehicles by 2010. To push sales and develop the market, electric vehicle companies are also negotiating with banks and financial institutions to introduce retail financing. Finance plays a major role in automobile sales and more than 65% of vehicles sold in India are through loans and credit schemes. However, as many segments of electric two wheelers are not to be registered under the Motor Vehicle Act, the company looking at finance options on the pattern of consumer durables.

"Unlike a car or a bike, many electric vehicles are not required to be registered with any government department. So to safeguard the collateral security of banks, we are in the process to provide both security as well as easy finance options on electric vehicles," Mr Munjal added.

There are close to 36 manufacturers of electric vehicles in India, many of these are marginal players. The Delhi based Lohia Auto Industries is also making a foray with a new manufacturing facility at Kashipur in Uttrakhand to tap the growing potential of electric vehicles. Its president V K Gupta said, "We aim to cater to students in the 12-18 years group, housewives and adults in smaller cities and the price reduction will help us to aggressively target these customers. With virtually no operating cost for these vehicles, their demand will grow and government's intention to save environment with these pollution free vehicles will boost demand."

The key drivers for the electric vehicle industry are inadequate public transportation system, especially in the semi-urban and rural areas, increased availability of affordable consumer financing, an aspiration for personalised transport among women, children and senior citizens. The strong measures by the central, state and city governments against conventional petrol and diesel technology to combat alarming pollution levels is also likely to drive demand for electric two wheelers. Plug in.