Why Electric Vehicles Have A Promising Future in India
By: Sunder Kittappan
Tags: Electric Vehicles, Automotive, Electric Vehicles India, India, Green Energy

Status Quo

India achieved 5th position in terms of the Biggest Automobile Markets in 2019. It is poised to rise to the 3rd position by 2025 and then the leader by 2030. Given the increasing population of young adults in the nation, it is not a surprising fact. Interestingly, almost 74% of the vehicles on the Indian roads are two-wheelers. The market size does indeed provide an opportunity for EVs to gain traction. However, the individual growth of the subcategories of EVs is going to be interesting to look at.

The Players

The Indian EV market ecosystem, though at its nascent stages, has close to 40 players belonging in one of the following three categories -

EV Companies like Ather Energy, Revolt Motors.

Storage Battery Producing Companies that are digging into the EV market like Exide Industries.

Automobile Manufacturing Leaders that have adopted EVs to stay relevant like Tata, Mahindra, and Bajaj.

In terms of segments of vehicles, Two-wheelers stand at the fore-front ready to be the early adopters of electrification with the most number of players concentrated. Closely followed by is the Three-wheelers category, which has the potential to take over the race to complete the adoption of the electrification. The market leaders of Three-wheeler manufacturers such as Bajaj Auto, Piaggio Vehicles Pvt Ltd, and Mahindra are invested heavily in EVs. Combined with economic and Government incentives, you might see why the Three-wheelers category has the touted potential to win the electrification race. The adoption of Four-wheeler EVs into the market will take a considerable amount of time due to -

The infrastructural challenge for building charging stations

The tendency of the Indian Government to tax cars as a luxury product compared to the developed nations.

Heavy commercial vehicles will be last in the electrification race due to the underlying technological limitations on the range and power.

In terms of usage, Ridesharing companies (Uber and Ola) have already invested in converting their fleets into EVs. Public transports have a higher capability to convert to EVs with support from the Government. Until the charging of an EV becomes a norm with adequate charging stations, personal vehicles, especially the four-wheelers, will take quite some time to be adopted.

Benefits

Low Maintenance Cost: EV has far lesser components compared to petrol/diesel vehicles. That results in reduced maintenance costs for EVs, which compensates for the initial acquisition cost for commercial EVs. It is vital for ridesharing companies, commercial transportation companies, and independent commercial drivers as it directly adds on to the bottom-line. Low Running Costs: This is the most alluring justification for the adoption of EVs. The average cost of running an EV per unit distance is only a fraction of its fuel-run counterpart. Hence, EVs are an attractive alternative. ‘Green is the new Black’: World leaders are more concerned about finding viable, green alternatives for human activities. With a pressing need to tackle the rising pollution and climate change, Government’s fiscal and non-fiscal incentives to adopt EVs are inevitable. For example, the Indian Government has set-up numerous electric charging stations in the NCR and offers INR 5000 for the electric auto-rickshaw drivers.

Contentions

High Acquisition Cost: Right now, the acquisition cost of an EV is higher than its petrol or diesel counterparts. But there is a definitive hope to overcome this obstacle due to the following reasons. The Indian Government’s mandate to adopt BS-VI norms for the production of automobiles has pushed the prices of conventional vehicles higher. Furthermore, as the manufacturers achieve economies of scale, the production cost reduces, thus driving the cost of EVs down. Both factors contribute to narrowing the price gap. Limited Vehicle Options: We as humans love choices because it gives us the feeling of being in control and is in our inherent nature. As we are in the nascent stage of the EV market in our country, we are limited to the options available. Inadequate Charging Infrastructure: Right now, we are on the EV band-wagon because of the various possibilities it has promised. In the long run, the Government needs to build a conducive infrastructure for charging and maintenance. Geographical Barriers: India’s diversity in terms of the geographical distribution of wealth and resources is unparalleled. Even today, many parts of our country still struggle for regular electricity and many other resources that one would deem basic. For the above reasons, EVs will initially find a home in metropolitan cities and then spread its presence to other parts of the country, in line with the rate of EV conducive infrastructural developments.

Conclusion

If any market can revolutionize the mass production and usage of EVs, it is the Indian market. Though late to join space exploration, we were able to innovate and develop new technologies to match our budget and needs. Similarly, I am optimistic about India’s contribution to the transformation of the global EV market. India’s market size and diversity offer rich data that can be fed into a progressive feedback loop to deliver the best in class EV solutions to the global market. India’s approach to adopting EVs shall determine the global EV market landscape in the upcoming years.