Summary of this article
The adoption of E20 is expected to lead to a drop in mileage due to the chemical nature of ethanol.
This drop in fuel efficiency is expected to increase the amount of money vehicle owners will spend on petrol yearly.
This rise in the annual cost of fuel increases the cost of ownership for vehicle owners as the running cost goes up significantly amid a drop in fuel efficiency.
Discussions around E20 adoption have taken centre stage in recent times. On September 1, the Supreme Court dismissed a public interest litigation (PIL) filed against the rollout of 20 per cent Ethanol-Blended Petrol (E20). The dismissal of the litigation came as a final blow in efforts to give vehicle owners the choice to use either E20 petrol or E10 petrol. Amid the broad-based adoption of the E20 flex fuel, the mileage of vehicles across categories is expected to decrease. This drop in mileage will lead to an increase in fuel costs.
The increase in fuel costs is set to impact both vehicles which have E20 compatible engines and engines which are compatible with older fuel blends such as E10 (90 per cent petrol and 10 per cent ethanol). Notably, vehicles manufactured post April 2023 are designed to be E20 compatible.
Estimated Fuel Cost Increase
Earlier in 2021, the Niti Aayog published a report titled ‘Roadmap For Ethanol Blending in India 2020-25’. The government think-tank mentioned in the report that the fuel efficiency of older four-wheelers will be reduced by 6 per cent to 7 per cent, and by 3 per cent to 4 per cent for two-wheelers. Notably, the drop will be 1 per cent to 2 per cent for four-wheelers calibrated for E20. Here’s a look at how much more vehicle owners will have to spend annually:
For the calculation of the increase in fuel costs, several averages and estimates have been used. For the purpose of this calculation, the average distance for which a vehicle is driven annually has been based on the distance after which service is usually recommended, such as 10,000 kilometres for hatchback cars and 7000 kilometres for two-wheelers. Additionally, the average mileage for each vehicle type was calculated using the upper end and lower end of the Automotive Research Association of India (ARAI) claimed mileage for some of the popular vehicles in the category.
The average drop in fuel efficiency for each vehicle type has been calculated on the basis of Niti Aayog’s estimates, 3.5 per cent for older two-wheelers and 6.5 per cent for older four-wheelers. The average drop in fuel efficiency for newer E20 compatible vehicles is 2 per cent, as per various reports and estimates. The cost of petrol is assumed to be Rs 95.05 per litre.
For older vehicles the annual fuel costs are set to rise significantly. Two wheeler owners who have older vehicles are set to witness an increase of Rs 1,236 annually. On the other hand the increase in annual fuel costs is likely to be steeper for car-owners with the annual fuel costs increasing by Rs 6,558 for hatchbacks, Rs 8,935 for sedan owners and Rs 7,794 for SUV owners. Vehicles which are E20 compatible will also witness a drop in mileage of around 1 to 3 per cent.
The yearly fuel expense for two-wheeler owners who have E20 compatible vehicles will increase by Rs 272. On the other hand, the cost will be higher by Rs 3,064 for hatchback owners. For sedan and SUV owners, the annual fuel cost can go up by Rs 4,183 and Rs 7,780, respectively.
An increase in annual fuel costs can lead to an increase in the total cost of ownership, which can create a deficit in vehicle owners' budgets. Individuals should figure out the total cost of ownership prior to purchasing their vehicles and budget for their purchases accordingly.
The increase in expenditure can be reduced by driving the vehicle more efficiently and by using the vehicle judiciously and opting for public transport or car-pooling whenever possible.
Vehicle owners can also consider greener options, such as electric vehicles and CNG-powered vehicles, to escape the pinch of higher petrol costs. On the government’s end, the price of flex-fuels has been kept at par with regular petrol; a reduction in prices is likely to offer great relief to vehicle owners.
