9th September 2022

What’s Accelerating EV Growth in India?

While the world transitions towards a sustainable future, e-mobility & EVs are at the helm of this change. As an organization working towards building a better tomorrow, ION Energy is proud to be a part of this transition. This World EV Day, let’s understand what’s accelerating EV growth and adoption in India.

Across the world, in the past 2 years, the raging COVID crisis brought public life to a grinding halt. The human and economic toll of the pandemic has been immense. 

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 (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 reminds us of the looming threat of climate change. 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. It 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 per BP’s Statistical Review of World Energy. India’s primary energy consumption grew by 7.9%.

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, 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 accelerating EV development and adoption across the country.

EV sales in India (excluding e-rickshaws) hit 156,000 in 2019-2020, up from 130,000 in 2020. 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

The electric two-wheeler market is accelerating the country’s transition to an all-electric future. 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. 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, demonstrating the underlying potential of two-wheeler EV growth. Out of the 156,000 EVs sold in 2019-2020, up 20 percent yearly, 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, which 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. They 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, 25,000 FAME II-eligible, high-speed electric two-wheelers were sold in India. The vehicle price ranges between INR 35K and 85K, making them much more affordable than petrol two-wheelers. 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).
  • 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 reasonably priced electric two-wheelers. COVID will fundamentally change transportation as a whole. Across major cities worldwide, 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. On the other hand, the electric car market in India has a long way to go 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 per km for commercial use as the user will be paying for electricity, which is 1/10th the fuel cost. 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 and rent options that make high-quality EVs more accessible. Keeping the interest of health and public safety in mind, the government and banks may want to extend better financial options to an audience that previously depended 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 the approach toward an EV localization program in India and said, “After 2020 and till 2025, expect 80% plus two-wheeler EV adoption growth in India.”

EV Charging
  • The rise in crude oil prices
  • Reduction in fossil fuels
  • Increasing ICE Pollution in the transportation sector
  • Long-term sustainability
  • Reduction in solar tariff
  • Stringent fuel efficiency norms (CAFE)
  • Implementation plan for BS-VI
  • Creation of EV demand in the market 
  • Promoting indigenous manufacturing of EV
  • EV market segment prioritisation based on ease of adoption and impact on the environment 
  • Driving the ecosystem to achieve government’s multiple objectives
  • Increasing EV customer awareness
  • Developing charging infrastructure through investments from government and private players
  • Establishment of charging guidelines and standards 
  • Integration of grid with charging stations to provide seamless service
  • Charging convenience to reduce customer anxiety 
  • Raw material availability for making EV components
  • Opportunity identification for EV component manufacturing in India
  • Building of local e-components manufacturing capability
  • Dealer’s motivation in pushing the EV product to the customer
  • The economic rationale behind purchasing EVs
  • Lack of customer awareness
  • Vehicle performance and features
  • Battery performance 
  • Range anxiety

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 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 requiring smarter battery management. Read on to learn about India’s most reliable BMS for electric two & three-wheelers.

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