Are India’s electric vehicles ready to revolutionize the industry?

With the changes brought about by global warming, there is consensus on cutting down emissions from vehicular transportation. Electric vehicles (EVs) are being hailed as the solution, and the world is accepting this new mode of transport with gusto. As per estimates, the global EV market has been growing at a CAGR of 43%. EVs constituted nearly 2.6% of all vehicles in 2019. However, the numbers are going to surge significantly in the times ahead. 

On the other hand, if we look at India, the country is lagging far behind the major markets such as China, Europe, and the US that accounted for 47%, 25%, and 21% of the global EV sales in 2019, respectively. Out of the total, 7.2 million EV units sold in that year, only 170,000 were sold in India, and most of those were either e-rickshaws or e-bikes. In such a scenario, it is easy to think that EVs are not taking off in India. However, that assumption is far from the reality. There is tremendous interest in EVs with not just vehicle makers but also the government strongly backing this segment. 

The benefits of electric transportation go beyond climate change prevention. For India, electrification of vehicles can significantly reduce oil bills and boost energy security by making the country self-dependent for its energy needs. To understand the current scenario, and the future of EVs in India, there is a need to look beyond the unit numbers today and focus on the trends. For instance, even if the number of EVs on India’s roads is almost insignificant, there is a rapid surge being witnessed. Unlike the west where the EV adoption is powered by cars, India’s first wave of EVs is coming in the form of shared transportation vehicles such as e-rickshaws, buses, 3-wheelers and last mile connectivity solutions such as 2-wheelers. 

As witnessed in the budget this year, the government is quite focused on boosting the EV manufacturing and allied facilities across the country. Various state governments are also showing strong support for EVs. For instance, the Telangana government has announced exemption from road tax and registration fees for the first 200,000 electric 2-wheelers in the state. Setting up of exclusive EV zones, and the permission to buy them without factory-fitted batteries are other highly impactful moves. 

The emphasis is on eliminating the two core challenges that have obstructed India’s growth as an EV nation. These are as follows. 

High cost of electric vehicles – The ownership and managing battery costs make EVs much more expensive than conventional vehicles. The cost of an EV battery can make up as much as half of the overall price. By allowing purchase of vehicles without batteries, the government has taken a step towards making them compete with the internal combustion engine (ICE) vehicles. Further waivers and incentives such as the one announced by Telangana government can make people switch to EVs faster. 

Range anxiety – One of the biggest reasons why EVs have been slow to sell in India is the range anxiety. The EVs have a specific number of kms beyond which the battery gets discharged and it requires charging. Charging being a time taking process leads to the vehicle being usable only until the battery runs out. Thus, compared to an ICE vehicle which can keep running and get easily refuelled from any petrol pump anywhere in the country, the EV needs to get back to its charging point. As per an estimate, India is likely to have over 2 million EVs on roads by 2026, and to cater to them, there is a need of over 400, 000 charging stations. 

The government’s push to battery swapping has created a path that is now set to enable these two as well as many other energy related challenges of EVs. There is also a production-linked incentive scheme to encourage domestic manufacturing of EV batteries. Further, battery disposals and skill development of automobile sector workforce to prepare them for the EV manufacturing are other areas that are being focused upon. With greater investment support and a conducive ecosystem for global investors to fund Indian EV manufacturing, battery production, battery swapping and other areas, India can undoubtedly become a global leader in this area. 

The revolution is already on the way!