Is India Prepared for the Coming Electric Vehicle Revolution?

The first electric vehicle (EV) was introduced in India by REVA in 2001, and despite the passage of more than two decades, the electric vehicle (“EV”) sector is still in its early stage, accounting for less than one percent of total vehicle sales. A study conducted by the society of manufacturers of electric vehicles found that low-speed electric scooters accounted for more than 90 percent of all EVs sold in the India.

EV expected to curb down CO2 emission by ~846.3 Mn Tons annually

The electric vehicle sector is witnessing a change in consumer preferences, since there is no longer the disparity between EVs and their internal combustion engine (ICE) equivalents that existed before. Also, the government and car manufacturers are devoting significant resources to the electric vehicle sector in order to mitigate the impacts of climate change is a positive sign for EV sector.

Global Electric Vehicle Market

Despite the COVID-19 lockdowns, sales of electric cars will amount for 4.2% of all light vehicle sales in 2020, nearly two times the share from 2019.

Key Highlights of Global Market

  • While just eight nations recorded a 5% or greater EV penetration in 2019, 13 countries achieved a 10% EV share in 2020.
  • Plug-in electric cars will account for 74.8 percent in Norway, 45 percent in Iceland, and 32.2 percent in Sweden by 2020.
  • J.P. Morgan predicts EV and Hybrid Electric Vehicle (HEV) sales to reach 30% of all vehicle sales by 2025.
  • By 2025, 8.4 million EVs and 25.3 million HEVs would have been sold worldwide, representing 7.7% and 23% of total sales.

Global Policies

  • By 2025, Norway wants all new automobiles to be zero-emissions vehicles.
  • By 2030, the United Kingdom, Singapore, and Israel want to prohibit the sale of vehicles that operate on fossil fuels.
  • The United States wants half of all new automobiles sold to be zero-emission vehicles by 2030.
  • The European Union intends to phase out the sale of new gasoline and diesel vehicles by 2035.
  • By the middle of 2030, the Japanese government hopes to get all fossil-fuel vehicles off the road.

Why Indian Government is More Active in Promoting EV?

It is expected that the successful implementation of clean energy and clean transportation in India via state-specific policies would result in significant advantages for both public health and the economy. According to studies, air pollution in India has a significant impact on both the health and the economy:

  • The IQAir 2020 World Air Quality Report lists 22 Indian cities among the 30 most polluted on the planet.
  • The transportation industry in India is the third-largest source of CO2 emissions, with road transport accounting for more than 90% of total CO2 emissions.
  • In 2019, air pollution caused 1.67 million fatalities in India, or 17% of all deaths.
  • Premature mortality and illness due to air pollution cost the economy ~$29 billion and ~$8 billion respectively.
  • FY 2019-20, India imports crude oil worth $120 billion and government wants to reduce the dependency on fossil fuel

Key Challenges of EV Segment in India:

The nation has many difficulties in the EV market, which is preventing it from meeting the Niti Aayog’s 2030 goal.

  • High prices of electric vehicles: Electric cars are not a popular choice for customers due to their expensive price. One of the primary reasons is the expensive price of the battery, which accounts for approximately 40% of the total cost of an electric vehicle.
  • Battery technologies: Because India’s EV battery manufacturing capacity is limited, the vast majority of the country’s batteries are imported. The main sites for lithium ion battery cell production are now in China, the United States, Europe, Japan, and South Korea, with the rest of the world catching up.
  • Electric vehicle charging infrastructure: As of March 2021, the nation has 1800 charging stations. According to the NITI Aayog’s base case goal, approximately 29 lakh public charging stations would be required by 2030.

Government Policies Related to EV:

Under FAME II, $1.4 billion in incentives to encourage the development of electric vehicles (EVs) in the nation were provided, along with additional policy measures.:

  • MINISTRY OF POWER: Provides clarification that no license is required to operate EV charging stations, as charging EVs is considered a service, not a sale of electricity.
  • MINISTRY OF ROAD TRANSPORT AND HIGHWAYS: Announced that it will facilitate the import of 2,500 electric vehicles compliant with international standards without the need for homologation. Also, all battery-operated, ethanol-powered and methanol-powered transport vehicles will be exempted from the requirement of permits
  • INDIAN SPACE RESEARCH ORGANISATION: Initiated the process of transfer of technology & commercialization of indigenously developed lithium-ion battery technology.
  • MINISTRY OF HOUSING AND URBAN AFFAIRS: Released an amendment of building code and town planning rules for provisioning of EV charging stations in private and commercial buildings
  • MINISTRY OF POWER: Policy permits private charging at residences and offices where tariff for supply of electricity to EV charging station shall not be more than the average cost of supply plus 15 percent.

Source: Niti Aayog “INDIA’S ELECTRIC MOBILITY TRANSFORMATION” report April 2019

State Level Policy That is Boosting The Growth of EV in India:

Several states have announced their electric car policies, which are intended to spur the production of electric vehicles while also boosting demand for them.

Andhra Pradesh  Target to have 10 lakh EVs, combined across all segment of vehicles, by 2024
Goal of 1 lakh slow and fast EV charging stations by 2024
NCT of DelhiAims at 25% of new vehicle registrations to be electric by 2023
50% of entire public transport targeted to be electric by 2023 and 100% by 2025
Karnataka100% of three and four-wheelers moving goods will be encouraged to transition to electric by 2030
KeralaBy 2022, the state aims to pilot a fleet of 200,000 two-wheelers, 50,000 three-wheelers, 1,000 goods carriers, 3,000 buses and 100 ferry boats
MaharashtraTarget to increase number of EV registrations in Maharashtra to 5 lakhs
TelanganaTelangana State Transport Corporation to set a target of 100% electric buses by 2030 for intracity, intercity and interstate transport
Uttar PradeshTarget of achieving 100% electrification of autorickshaws, cabs, school buses/vans, etc., by 2030 in five cities
PunjabReplace 25% of bus fleet under Department of Transport to ebuses
100% transition towards electric in “target cities” in a phased manner
2W/3W sales to reach 25% penetration during the policy period
Bihar100% electric mobility by 2030
100% e-rickshaw by 2022
Tamil NaduCommercial fleets are encouraged to convert into EV
Introduce 1000 new ebuses every year
Madhya Pradesh25% of all new public transport vehicles registrations by 2026Convert 100% of all commercial and logistics fleets to electric fleet by 2028Convert 100% of public transport bus fleet into electric buses
Source: Niti Aayog

Current Status of EV in India

The overall number of EVs registered in India was 5,18,110 as of July 2020, and although the number of EVs is increasing, growth is unequal across all categories. Now, three-wheelers account for 79% of all new EVs, with two-wheelers accounting for 17% of all new EVs. Four-wheelers account for only 3% of all EVs currently on the road.

  • Maharashtra, Karnataka and Tamil Naidu accounts 53% of 2W EV
  • Uttar Pradesh, Delhi and Bihar accounts 71% of 3W EV.
  • West Bengal, Tamil Nadu and Delhi accounts 66% of 4W EV.
  • Maharashtra, West Bengal and Himachal Pradesh accounts 70% of e-buses.
  • Audi revealed a five-year strategy to introduce 30 electrified cars by 2025, including 20 pure electric vehicles and 10 plug-in hybrids.
  • Starting in October 2021, Volvo Cars will launch one electric car per year in India, with the goal of becoming a 100% electric car manufacturer by 2030.
  • BMW has plans to showcase 25 electrified cars by 2025
  • BattRE, a well-known electric two-wheeler manufacturer, is planning to quadruple its production capacity.
  • The Piaggio Group signed a statement of intent with KTM AG, Honda Motor, and Yamaha Motor to form a “Swappable Batteries Consortium” for motorcycles and light electric cars.

Key Market Players in EV Segment in India

  • 2W segment: Hero, TVS, Bajaj, Mahindra, Ather, Ampere, Tork, Yobykes and Revolt, PURE and EVOLET
  • 3W segment: Mahindra, Kinetic Green Energy and Power Solutions Ltd, Best Way Agencies Pvt. Ltd, Champion polyplast, Energy Electric Vehicles, Khalsa Agencies, Victory Electric Vehicle and more
  • 4W segment: TATA, Mahindra, Hundai and MG Motor
  • E-buses: Olectra, TATA, Ashok Leyland, JBM Group and PMI Electro Mobility Solutions Private Limited

With All The Initiatives, India is Trying to Achieve the Following Targets by 2030:

  • EV sales penetration of 80% for two and three-wheelers.
  • 50% for four wheelers sold to be zero-emission vehicles.
  • 40% for all new public transport vehicles registrations to be electric vehicle.
  • Savings of 474 MTOE of oil (approx. INR 15.21 Tn) annually.
  • Curb down CO2 emission by ~846.3 Mn Tons annually.

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