The Indian government recently launched its ambitious E85 project in the country. The government also pushed manufacturers like Maruti Suzuki to launch flex-fuel vehicles in the market. However, it appears that the ethanol vehicle programme is not receiving the response that the government had expected. The vehicles have been in the market for over a month now, and the latest data reveals that they are all struggling to sell.
The Maruti Suzuki WagonR Bio-Flex version was launched on June 4, and deliveries started on June 17. Since its launch, Maruti has sold only three units of the WagonR Bio-Flex in the country. Deliveries of the Hero Splendor+ Flex Fuel and HF Deluxe Flex Fuel will officially begin in July, but we have already started hearing reports about discounts being offered on these models.
Other brands, such as Suzuki, which offers the Gixxer SF250 FFV, have not sold even a single unit this year. It is clear that the government’s ambitious ethanol vehicle programme is struggling. So, why are customers not buying flex-fuel vehicles? Let’s find out.
One of the primary reasons is the price of the vehicle itself. Compared to a regular E20-compliant vehicle, the E85 version is more expensive. Manufacturers have to make several changes to the engine, revise the ECU calibration, upgrade components such as the fuel pump and filter, and carry out other modifications to make the vehicle E85-compliant. These changes involve additional costs, which are reflected in the final price of the vehicle.
For example, the WagonR Flex Fuel version is priced around Rs 86,000 higher than the standard E20 version. Anyone purchasing an E85-compliant vehicle has to pay a significant premium upfront.
The next issue is fuel efficiency. We have already heard many owners complain about a drop in fuel efficiency after switching to E20 fuel. E85 is not less fuel-efficient because it burns poorly; rather, it is less efficient because it has a lower energy density than regular petrol or E20 fuel.
Since the fuel contains less energy, the engine needs to burn a greater volume of fuel to produce the same amount of power and cover the same distance. In simple terms, this means owners will have to visit fuel stations more frequently than before.
The government is trying to promote E85 fuel by highlighting that it is around Rs 20 per litre cheaper than E20. However, when you factor in the higher upfront cost of the vehicle and the lower fuel efficiency, it becomes clear that the running costs of E85 vehicles are not as economical as the government claims. In fact, at the current price of E85 fuel, most customers are unlikely to reach a break-even point.
Another issue affecting the sales of flex-fuel vehicles is fuel availability. The majority of fuel stations in India are still dispensing E20 fuel. At present, only Delhi and Mumbai officially offer E85 fuel. If a customer buys an E85-compatible vehicle, the chances of finding a nearby fuel station that dispenses E85 are relatively low.
This means they may have to fill up with regular E20 fuel, which costs over Rs 100 per litre in most Indian cities. In such a situation, the customer ends up losing money both on the higher purchase price of the vehicle and on fuel costs.
The government plans to expand the number of E85 fuel stations to 500 in the future. However, in order to make both E85 fuel and flex-fuel vehicles popular, it will need to work extensively on reducing fuel prices and improving fuel availability. As for manufacturers, they will have to ensure that the price gap between E85 and E20 vehicles is reduced to encourage wider adoption.
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