Boom for Electric Vehicles in India
The government of India has signaled the beginning of a new era of mobility with the introduction of supporting policies and targets for incentives, localization and relevant infrastructure. An increasing demand for environment-friendly and sustainable solutions coupled with continual government thrust is driving space for e-mobility in India.
Key rationales underlining the need for an electric vehicle push in India are as follows:
- Import dependency on fossil fuels: Huge import bill (import dependency- 84% for crude oil, 45% for LNG), primarily arising due to mobility sector, driving need for sustainable solutions
- Rising emissions – air pollution concerns: Continual rise in CO2 emissions and rising air quality degradation (NOx, PM5) pushes need for alternate drive technologies
- Regulatory pressure for compliance: Stringent emission compliance targets for 2022/ 23+ under Corporate Average Fuel Economy (CAFÉ) norms – a calculated push for OEMs to have ~2-3% EVs in portfolio
- Government thrust for India e-Mobility: Focused efforts towards betterment of environment/ climate health fostering India’s way-ahead for e-Mobility transition
At the central level, several ministries and departments have been involved in supporting the electric mobility transition including the Ministry of Road, Heavy Industry, Department of Industrial Policy, Ministry of Finance, Ministry of Housing and Urban Affairs, Ministry of Power, Ministry of New and Renewable Energy, Department of Science and Technology and NITI Aayog. Additionally, States have formulated strategies for transforming their mobility systems and some are in the process of formulating their EV policies.
Penetration of electric vehicles in India has been largely driven by schemes such as Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME) under the National Electric Mobility Mission Plan and subsidies offered by various states.
Boom in domestic sales resulting in investment plans by local and foreign OEMs
India sold ~329,000 EVs in 2021 compared to ~123,000 units in 2020 – a 168% Y-o-Y increase. With a combine market share of 90%, 2-wheelers and 3-wheelers are the most popular segment in India while electric 4-wheelers account for 4% of total sales.
Local market leaders including Maruti, Tata, Hyundai among others would give a big push to India’s electric vehicle boom with at least 4 billion EUR in investment over the next five to six years.
By 2030, through successful implementation of government policies and robust EV adoption, India e-mobility would offer sales penetration potential of >150 million EV units. With high e-Mobility penetration potential, it will be crucial to investigate core/ non-core areas to build competitive differentiation standpoint by leveraging existing expertise and investing in capability building.