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Opinion piece by Sunil Gupta, MD & CEO, Avis India
As per EV Global Outlook 2021, 10 million electric cars were plying worldwide by the end of 2020, following a decade of rapid growth. At the same time, the global electric vehicle market size is projected to grow from 4.09 mn units in 2021 to 34.75 mn by 2030, at a CAGR of 26.8%. So, in the global backdrop, it is foreseen that electric vehicle (EV) technologies will be widely adopted worldwide.
But, the Indian scenario is likely to be a little different, owing to its unique geographical and climatic conditions.
According to the World Economic Forum, India’s automotive sector is one of the fastest-growing in the world. However, it only contributes 0.5 % of the global EV market. The target presently is to match up to China, the United States, and Japan in terms of commercial and consumer electric car manufacturing as well as sales. But how?
With rising crude prices worldwide and the increasing CO2 emissions that are adversely affecting the Earth’s climate, EVs are seen as part of the solution. These are a few factors encouraging India to move towards low-carbon growth.
In fact, India’s EV market has seen an immense growth the last couple of years, especially in the two-wheelers and three-wheelers segments, with new-age companies and automobile manufacturers eyeing to capture market share. More so, both state and central governments are promoting several EV-based projects, and have come up with policies as well. These include the Faster Adoption & Manufacturing of Electric Vehicles (FAME) Scheme, and the most recent one being the performance linked incentive scheme for battery manufacturing.
So, the Indian EV industry is witnessing positive movements and in the coming years, consumer demands may dominate the trends. For example, Tesla, the world’s most famous electric vehicle producer, is aiming to introduce its vehicles in India eventually this year. Thus, the road ahead looks quite exciting and promising.
However on the flip side, insufficient charging stations, long charging durations, high upfront cost, and range anxiety are some of the key barriers to EV adoption, and will take time to resolve.
Having said that, today there is a wide acceptance of EVs in the Indian auto market. As the penetration of EVs increases, the debate on their viability will only intensify and the ecosystem will also grow with it.
India’s electric vehicle ecosystem and investment prospects
Regardless of the country’s big aspirations, India’s electric vehicle industry is still at its infancy. However, when viewed from a different perspective, India is the world’s greatest unexplored market, particularly in the two-wheeler segment. Under the automatic approach, 100 percent foreign direct investment is eligible in this sector. The government has also launched a Manufacture-Production Linked Incentive Scheme (PLI) for ACC Battery Storage Manufacturing, which aims to promote domestic battery production while reducing reliance on imports. This will provide the necessary infrastructure for the EV industry, lowering the cost of EVs dramatically. Several renowned battery manufacturers are now seeing these incentives as a cue to redirect fresh investments into green technology, such as lithium-ion batteries.
In India, states such as Karnataka, Delhi and Tamil Nadu are implementing smart and timely investor-friendly measures in addition to developing required infrastructure.
Impact of Covid on the EV Market
Global lockdown measures put in place as a result of the COVID-19 pandemic led to manufacturers the world over closing their factories, limiting car production and sales. On opening, they did so with limited capacity and following the essential protocols in place. Conditions improved in the latter half of 2020, with EV manufacturers seeing a surge in demand for zero-emission vehicles.
A perspective on the EV Technology’s Way Forward in India
According to a report by Grant Thornton Bharat – FICCI, India will require approximately 400,000 charging stations to accommodate the demand for 2 million electric vehicles (EVs) that would potentially ply on roads by 2026. The same report suggests that factors such as government support, lower technology costs, and severe pollution levels would be vital in expediting India’s transition to 100% electric vehicles by 2030. Government policies, private sector participation, and technological innovation will all play a crucial role.
In a nutshell, India’s efforts on electric mobility are great, but the transformation will take a while. But what matters is that the ideal way has already been paved and the shift has commenced. Hence, no doubt, innovation in the EV field will continue, and that the regulatory framework will improve over time, aiding the growth of India’s EV market.
By Sunil Gupta, MD & CEO, Avis India