According to the World Economic Forum white paper on EV-ready India, the opportunities for India’s mobility future are massive. Contributing factors include the continued growth in the country’s population and the move towards urban centres, all of which are driving urban mobility demand. Energy scarcity is another factor resulting from India’s dependence on importing oil. The WEF report states that “despite significant and complex mobility challenges, India is poised to lead the way globally towards a decarbonized and sustainable mobility future through an interplay of young demography, technological advancements and smart governance.”
India’s government have focused on encouraging EV adoption through several policies. The WEF reports that 10 states and union territories have published draft electric vehicle (EV) policies or notified final policies detailing fiscal, non-fiscal and other incentives to accelerate a value chain of electric mobility activities.
This has been supported by manufacturers who have launched diversified products in the categories of rickshaws, two-wheelers (2Ws), three-wheelers (3Ws), passenger vehicles, buses, and power trains. Start-ups are contributing to the EV industry, developing viable products for battery technologies, charging infrastructure and more.
The three-wheeler market occupies a major part of the EV market with Mahindra & Mahindra, Lohia Auto and Greaves Cotton some of the industry leaders. According to Data Labs by Inc42, the market share of electric vehicles is a split heavily in favour of smaller vehicles, with four-wheeler cars making up just 10% of the market and two- and three-wheelers accounting for the rest. This will only change once more manufacturers participate in the industry, facilitating the offering of more affordable models.
EV adoption in India
The Indian automobile industry is one of the global Big Four – the others are China, the USA and Japan – in terms of the manufacture and sale of passenger and commercial vehicles, according to Inc42.
However, despite these government incentivisation, the uptake of electric vehicles has been slow. The McKinsey&Co report puts India’s electric vehicle adoption rate at less than 1%. However, the Indian government are bullish about uptake and Inc42 says that the government has a target of 30% electric vehicle adoption by 2030. This is projected to be powered primarily by electrification of two-wheeler, three-wheeler and commercial vehicles.
While Inc42 reports that consumer interest in electric car adoption is growing, the actual adoption seems to be going slowly with electric vehicle sales over the last six years barely over 8 000. Whereas, China sells over that in the space of two days, according to a Bloomberg report from October 2019.
According to Inc42, the industry’s potential growth on the supply side will be driven by technology maturity, commercial availability of components, lower manufacturing costs, technical and skill availability, and improved investment flow. On the other hand, consumer expectations have increased with people wanting a no-compromise electric vehicle solution in order to make the switch.
India is still tackling various challenges such as range anxiety, high prices of electric four-wheelers, battery manufacturing capabilities, electricity demand and lack of infrastructure of charging stations. Another dominant hindrance is the lack of big brand EV-offerings, which Inc42 says is a key buyer consideration in the Indian market.
Current EV market
Inc42 reports that the current EV market has seen a gradual improvement with new players such as Hyundai, MG Motor, Mahindra Electric and Tata racing to take the lead in the country’s nascent EV four-wheel category. The two-wheeler category has seen a lot of brands emerging with affordable, premium, and high-powered electric vehicles, including Okinawa, Tork Motors, Ather Energy, Ultraviolette, Evolet and Ampere Vehicles, among others.
Sq. Ldr. Prerana Chaturvedi, the CEO at Evolet (Rissala Electric Motors) also said that the electric vehicle market (two-wheeler segment) is growing at a very rapid pace and there are a number of key drivers that are responsible for this growth. Inc42 further reports that Chaturvedi says, “Government incentive schemes, growing distributor and dealership network, better quality products, increased awareness and acceptance of EV by consumers are some of the key factors that are fuelling the growth of the electric vehicle market in India.”
Coronavirus and the future of EVs
The next couple of years are crucial for the Indian electric vehicle industry as the market is poised to grow like never before, says Inc42. However, the coronavirus has impacted almost all sectors in India with the electric vehicle industry hit by supply chain problems and manufacturing disruption.
This has impacted the demand for EV vehicles, both in China and the US. For now, manufacturers are bullish about the market bouncing back next quarter, says Inc42.
India’s EV future
BIS Research says that the electric vehicle market is expected to grow at CAGR of 43.13% between 2019 – 2030.
Tarun Garg, director of sales, marketing and services at Hyundai told Inc42 that “a big push will come from infrastructure development. This will help the automobile industry to produce EVs for mass consumption.”
This will reduce range anxiety by providing battery improvements, supported by a network of energy stations.
While there are challenges, the industry has been supported by government funding, subsidies, and incentives – all of which have helped create awareness and drive the EV demand in the country.
In order to encourage adoption, WEF advises that key aspects to address are the high upfront cost and range anxiety. Given the nascent market, the role of government is important in accelerating adoption, diffusion, and deployment of electric mobility. For a price-sensitive market such as India, developing incentives for electric (clean) kilometres run versus electric vehicles purchased makes economic sense and is suggested as the guiding principle for the national strategy.
According to the white paper, WEF believes that India has a significant potential to become one of the largest EV markets in the world. And given the scale and complexity at hand, solutions tested for connectivity and sustainability in India can be scaled up and customized for the rest of the world.