ICRA (Investment Information and Credit Rating Agency of India Limited) stated that till 2025 the penetration of electric vehicles in the country is likely to remain low at 3-5 % due to higher prices of EVs compared to its internal combustion engine (ICE) counterparts as well as the deficient public charging infrastructure.It noted that not only the mediocre car realization in India is low compared to markets like the US and China but also achieving price parity for EVs and ICE is likely to take protracted time.
With technological advancements and prosperity of economical scale, lower battery prices of EVs may result in it accomplish price parity with its ICE counterparts over 10-12 years, ICRA said.ICRA also explained that the economies of scale being an important factor for passenger vehicle OEMs to price its model competitively because of the backdrop of the Indian market is price-sensitive.
Assuming a subsidy of ₹1,50,000/vehicle, 1 % of total domestic PV sales in FY20 will need about ₹450 crores of subsidy support yearly and about ₹1,300 crore support over the next 3 years.” said, Subrata Ray, Senior Group Vice President, ICRA Ltd.Ray Highlighted that “To support the progress of EVs in the country, government support remains a crucial factor”.
He said that “There is lack of clarity in regards to the long-term road-map for charging infrastructure, as well as the incentive structure for EV and Li-ion battery manufacturing facilities in India and The announcement of FAME 2.0 scheme provides limited clarity as overall subsidy amount is much lower over the next 3 years at ₹525 crores “.
He further added that, presently, with the global Li-ion battery market being prevailed by international players, the high import dependence on batteries and other electronic components certainly diminish the benefits of the lower crude import bill that the shift to EVs bring about.
The EV vendor ecosystem needs substantial investments to keep costs under check and decrease dependence on imported electronic systems. Even though during the past decade, EV registration has grown 15 times generally driven by China, the US and the European markets, the EV share in overall new vehicle sales is still moderate.