25th July 2020

What’s Accelerating EV Growth in India?

ev growth

Across the world, the raging COVID crisis has brought public life to a grinding halt. The human and economic toll from the pandemic is immense. With an exponential rise in the patient caseload and countless downsides, almost the entire world has been under lockdown.

As countries came to a halt, they experienced the unintended consequence of the pandemic – cleaner air.

Indians are experiencing clean air, clear skies, and reduced noise pollution (by 50-75 percent in a few cities). This positive impact on the environment is a glimpse into an emission-free society, although temporary, as it is a reminder of the looming threat of climate change. Out of the 30 cities with the worst air pollution in the world, 21 are in India.

India has a huge need for energy as the world’s second-most-populous country. India’s primary energy consumption grew by 7.9% and hit 809.2 million tons of oil equivalent in 2018, making it the third biggest after China and the USA with a 5.8% global share as per BP’s Statistical Review of World Energy.

The idea of transitioning to an all-electric planet – given its zero tailpipe emissions and economic viability in the long-term – is more promising now than ever before. In the past few years, the EV and clean energy industry have been working on a sustainable and fuel-efficient transportation mode to tackle and ostracize the demonic duo of pollution and climate change, which is endangering all life on the planet.

The Indian government has set a target of installing 175 GW of renewable energy capacity by 2022 and 450 GW by 2030. The last three or four years witnessed substantial investments being made to accelerate the EV development and adoption across the country.

EV sales in India (excluding e-rickshaws) hit 156,000 in 2019-2020, up from 130,000 the previous year. As the country has set ambitious renewable energy targets for the next decade, a sizable growth in EV sales for the past year is encouraging.

Read: To know more about the impact of EVs towards air pollution read our blog on Post-COVID19: Making a Case for Electric Vehicles 

Key factors shaping the EV growth in India

While EVs might take longer to become mainstream in the 4-wheeler segment, they’ve made significant progress in the two and three-wheeler segments for personal use and shared commuting. The electric two-wheeler market is accelerating the transition to an all-electric future in the country. Even though there are some practical and operational challenges to overcome, the purpose or meaning of why we’re trying to make it all-electric is more evident now.

Over 18 mn gasoline two-wheelers are sold annually, which demonstrates the underlying potential of two-wheeler EV growth. Out of the 156,000 EVs sold in 2019-2020 up 20 percent year on year, two-wheelers accounted for 152,000 (97.43%) of the total sales. This was followed by cars and buses, with sales hitting 3400 (2.17%) and 600 (0.38%), respectively, compared to FY2019’s 130,000 units comprising 126,000 two-wheelers, 3,600 cars, and around 400 buses.

Of the total two-wheeler sales, electric scooter sales accounted for 97%, followed by electric bicycles and motorcycle sales that formed the remaining 3%. [Source: Autocarpro]

This could be attributed to:

  • A highly competitive market: The Indian electric two-wheeler market is highly competitive. Many regional and local players have captured the market and are accelerating electric vehicles’ penetration by offering two-wheeler EVs at par with traditional vehicles in terms of cost, power, and convenience, leaving the consumer spoiled for choice.
  • Low-speed electric scooters drive sales: In FY2020, a total of 25,000 FAME II-eligible, high-speed electric two-wheelers were sold in India. Most electric two-wheelers that are plying on the roads are low-speed electric scooters that do not need a license to buy/ride (<25 kph). The vehicle price ranges from anywhere between INR 35K and 85K, making them a lot more affordable than petrol two-wheelers.
  • Impact of Covid-19 on urban mobility: There would be a continuous spike in electric two-wheeler sales, attributed to the fact that post-COVID, people would switch from mass transportation to the reasonably priced electric two-wheelers. COVID will fundamentally change transportation as a whole. Across major cities in the world, public-transit ridership has fallen 70 to 90 percent. A recent survey conducted by CARS24 reveals that consumers want to shift from public to private vehicles post the lockdown. Fifteen percent of the consumers and respondents from non-metro cities feel that they would like to switch to two-wheelers for their daily commute. The challenge then is for Electric Vehicle manufacturers to implement a pricing strategy that can position electric 2-wheelers to be truly competitive compared to IC. The electric car market in India, on the other hand, has a long way to go as compared to other countries.
  • Rise of EVs in commercial fleets: Another factor that promises to contribute to this growth is the rise in e-commerce and delivery-based businesses. For the last-mile connectivity, an electric two-wheeler is significantly cheaper on a per km basis for commercial use as the user will be paying for electricity, which is 1/10th the cost of fuel. Commercial mobility is the biggest benefactor of electric mobility. The potential for a fleet of electric two-wheelers offers an excellent opportunity for electric vehicles (EV) and electric vehicle component manufacturers.
  • An incentive for EV purchases: While there have been very few financing options for buying EVs, consumers might now be offered low EMI, rent options that make high-quality EVs more accessible. Keeping the interest of health and public safety in mind, the government, as well as banks, may want to extend better financial options to an audience that previously would depend on public transportation. As the domestic EV sales lead at a whopping 97%, the policymakers may give clear weightage to electric two-wheelers with better incentive programs.

The electric two-wheelers’ total cost of ownership is set to be lower than their petrol counterparts with the help of battery intelligence platforms that analyze battery usage data to improve its life and performance and battery recycling companies that offer buyback prices.

On a webinar ‘EVs: Pain or Gain Ahead?’ on World Environment Day, Mr. Anil Srivastava, Advisor (Transport) and DG, DMEO at NITI Aayog, emphasized on the approach towards an EV localization program in India and said “After 2020 and till 2025, expect 80% plus two-wheeler EV adoption growth in India.”

Multiple factors propel adoptions to reach their inflection points and take off, similar to any technological shift. Improvements in battery tech, localizing EV manufacturing, better public charging infrastructure, and overall reduced production costs will accelerate the EV’s journey to the mainstream. Other key drivers contributing to this uptake are increased efficiency, battery performance, and lower maintenance costs (because of fewer components, preventive maintenance, and connectivity).

Educating customers, spreading awareness, and busting myths associated with the EV battery, range anxiety, value offered, and operations cost can increase the demand that catalyzes the EV industry.

Electric 2 & 3 wheelers such as scooters and rickshaws have complex use-cases that require smarter management of their batteries. Read on to know about India’s most reliable BMS for electric two & three-wheelers.

Recent Posts