Why Switching From Diesel is an Expensive Deal for India?

Just a few days back, at the annual conference of the Society of Indian Automobile Manufacturers (SIAM), Union Minister for Road Transport and Highways Nitin Gadkari made a comment urging the finance minister to impose a pollution tax on every engine that runs on diesel. But things took a wild twist! What began as a well-intentioned proposal got twisted into a rumour that the government is going to impose a 10% GST on diesel-powered vehicles. Rumours were so strong that soon after, stock prices of India’s largest commercial vehicle maker – Tata Motors, second-largest – Ashok Leyland, and Mahindra & Mahindra, which contributes to almost half of all diesel passenger vehicles sold in India, went down. But that wasn’t the end; something else also happened last week! Mumbaikars gathered together to say goodbye to the iconic Red Double-Decker bus in Andheri. And with this, we witnessed the end of an era of red diesel-run double-deckers, introduced on the city streets 86 years ago. Are there any other alternatives besides diesel? OPTION 1 – Hydrogen fuel cells and hydrogen-powered engines sound promising, but the cost of hydrogen needs to be reduced at least by two-thirds for it to make sense for commercial use. OPTION 2 – Electric buses are becoming more common, especially with state governments adopting them under a gross cost contracting (GCC) model. However, this poses a significant financial risk for manufacturers, as they have to account for these vehicles on their own balance sheets. OPTION 3 – Ethanol comes with a hefty price tag, currently sitting at around Rs. 68 per litre. It’s an expensive choice and is also not as efficient as traditional petrol or diesel. OPTION 4 – Green hydrogen production and distribution for transport is just starting to take shape. Given these challenges, diesel engines are likely to maintain their dominance in long-distance transport, and changes in total cost of ownership (TCO) trends and government orders are pushing for the adoption of alternative fuels like CNG and electricity for smaller commercial vehicles. The road ahead promises innovation, but diesel isn’t ready to retire just yet. Why does diesel rule the road for commercial vehicles? There are several compelling reasons that have kept diesel in the driver’s seat for so long. So, let’s break down why diesel-powered vehicles have been a top choice for Indians for decades. Diesel is economically feasible and easy to find. Its engines have a long lifespan and require less maintenance, and, most importantly, it works very well for trucks carrying heavy loads over long distances,making it an efficient fuel. These reasons are enough to convince people to keep using diesel! But here’s the catch: With the rollout of Bharat Stage VI emissions standards, diesel engines are now facing strict requirements to reduce emissions of carbon dioxide, toxic gases, hazardous pollutants, and more. And here’s the deal: all fuels are now as unclean or as clean as the other, as pointed out by the executive director at Tata Motors. In response, major automakers have made heavy investments in upgrading their diesel engines to meet these latest emissions standards. And diesel, interestingly, possesses an inherent advantage in meeting lower CO2 emission requirements and is a more efficient fuel compared to petrol, as it releases less CO2. Yet, there’s a looming concern. If further taxation burdens are placed on diesel, this could spell trouble for commercial vehicle makers, potentially bringing degrowth to the segment or even decline. Do you think, it’s time to say goodbye to diesel forever? Written By Shivani Singh By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions. The post Why Switching From Diesel is an Expensive Deal for India? appeared first on Trade Brains. [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [Why Switching From Diesel is an Expensive Deal for India?]( Just a few days back, at the annual conference of the Society of Indian Automobile Manufacturers (SIAM), Union Minister for Road Transport and Highways Nitin Gadkari made a comment urging the finance minister to impose a pollution tax on every engine that runs on diesel. But things took a wild twist! What began as a well-intentioned proposal got twisted into a rumour that the government is going to impose a 10% GST on diesel-powered vehicles. Rumours were so strong that soon after, stock prices of India’s largest commercial vehicle maker – Tata Motors, second-largest – Ashok Leyland, and Mahindra & Mahindra, which contributes to almost half of all diesel passenger vehicles sold in India, went down. But that wasn’t the end; something else also happened last week! Mumbaikars gathered together to say goodbye to the iconic Red Double-Decker bus in Andheri. And with this, we witnessed the end of an era of red diesel-run double-deckers, introduced on the city streets 86 years ago. Are there any other alternatives besides diesel? OPTION 1 – Hydrogen fuel cells and hydrogen-powered engines sound promising, but the cost of hydrogen needs to be reduced at least by two-thirds for it to make sense for commercial use. OPTION 2 – Electric buses are becoming more common, especially with state governments adopting them under a gross cost contracting (GCC) model. However, this poses a significant financial risk for manufacturers, as they have to account for these vehicles on their own balance sheets. OPTION 3 – Ethanol comes with a hefty price tag, currently sitting at around Rs. 68 per litre. It’s an expensive choice and is also not as efficient as traditional petrol or diesel. OPTION 4 – Green hydrogen production and distribution for transport is just starting to take shape. Given these challenges, diesel engines are likely to maintain their dominance in long-distance transport, and changes in total cost of ownership (TCO) trends and government orders are pushing for the adoption of alternative fuels like CNG and electricity for smaller commercial vehicles. The road ahead promises innovation, but diesel isn’t ready to retire just yet. Why does diesel rule the road for commercial vehicles? There are several compelling reasons that have kept diesel in the driver’s seat for so long. So, let’s break down why diesel-powered vehicles have been a top choice for Indians for decades. Diesel is economically feasible and easy to find. Its engines have a long lifespan and require less maintenance, and, most importantly, it works very well for trucks carrying heavy loads over long distances,making it an efficient fuel. These reasons are enough to convince people to keep using diesel! But here’s the catch: With the rollout of Bharat Stage VI emissions standards, diesel engines are now facing strict requirements to reduce emissions of carbon dioxide, toxic gases, hazardous pollutants, and more. And here’s the deal: all fuels are now as unclean or as clean as the other, as pointed out by the executive director at Tata Motors. In response, major automakers have made heavy investments in upgrading their diesel engines to meet these latest emissions standards. And diesel, interestingly, possesses an inherent advantage in meeting lower CO2 emission requirements and is a more efficient fuel compared to petrol, as it releases less CO2. Yet, there’s a looming concern. If further taxation burdens are placed on diesel, this could spell trouble for commercial vehicle makers, potentially bringing degrowth to the segment or even decline. Do you think, it’s time to say goodbye to diesel forever? Written By Shivani Singh By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions. The post Why Switching From Diesel is an Expensive Deal for India? appeared first on Trade Brains. 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