India has been placed third among the top seven emitters of greenhouse gas, according to Emissions Gap Report 2022 by UNEP and the transportation sector is reported to be the key contributor for carbon dioxide (CO2) emissions in India.
Achieving sustainable and clean mobility is a major goal for India. The Indian government is chasing an ambitious goal of ensuring 30 percent EV penetration for private automobiles, 70 percent for commercial vehicles, and 80 percent for two and three-wheelers which would mean about 102 million EVs on the road. If achieved, it will make a huge impact on the economy, including oil imports, employment, impact on public finances, the market size for EV components, and environmental gains.
A 2020 report by Council on Energy, Environment, and Water (CEEW) revealed that if India is able to achieve its 2030 goal of 30 percent of EV sales, then it will lead to savings worth Rs 1.1 lakh crore ($14.1 billion) on crude oil imports. Along with high public transport mode-share, it will lead to savings of Rs 2.2 lakh crore (28.3 billion) on crude oil imports. The 2030 transition is also expected to open up 1.2 lakh jobs.
The most crucial impact will be a 20 percent reduction in greenhouse gas emissions thereby reducing air pollution and improving the quality of air.
However, the impact of electric vehicles and hybrid vehicles is still being largely debated. Some of the major concerns around expensive batteries, access to Lithium for battery production, range anxiety, and charging infrastructure among others are yet to be solved.
Current market
Consumers are also realizing the undeniable impact of sustainable mobility and this electric vehicle adoption is steadily increasing in India. Last month, in a written reply to a question in Lok Sabha, MoS for Ministry of Heavy Industries Shri Krishan Pal Gurjar revealed that 2,56,980 electric vehicles were registered in India in 2023.
The electric vehicle transition in India is being led by the two and three-wheeler segments along with the commercial vehicle segment. The growth in the four-wheeler EV space is yet to take off.
A study titled, ‘Financing India’s Transition to Electric Vehicles,’ by CEEW revealed that India is expected to achieve total vehicle sales of 261 million by FY30 and this will be led by the sales of two-wheelers which is projected to account for 85% of the overall sales.
Prashant Rathee, Co-Founder of The Energy Company, explains that a major factor behind the transition to electric vehicles involves enabling electric vehicles to provide a similar experience as ICE vehicles.
"The experience of using an ICE vehicle has to be matched in some form or another. For example, if you are out on your ICE vehicle and you realize that you are running out of fuel, you can go to a petrol pump and within minutes get the fuel. But for electric vehicles, one needs to think when to plug-in, where to go, and so on. So for masses to adopt electric vehicles, aspects like ease-of-charging need to be solved,” Prashant says.
Another roadblock in faster adoption is that the upfront costs of electric vehicles are higher compared to ICE vehicles due to the battery costs. However, several reports have shown that the total cost of ownership is lower than ICE vehicles.
Speaking about the current electric vehicle market, Sameer Arif, Founder of SWYTCHD, said that the Indian market is very different from Western and European countries.
“India’s growth trajectory is in electric two and three wheelers and that is primarily where India is adopting electric vehicles. Also, most of the adoption is from the business side and not the personal side. The reason lies in the unit economics as the usage of the vehicles is significantly higher on the commercial side. For an individual customer, she or he travels to work, back home and goes out on weekends which is not a lot of usage as compared to the commercial side which is using it for deliveries, picking up goods, and has a lot of usage. With lower cost of maintaining the electric vehicles, it makes significant economic sense to shift to EVs,” Sameer adds.
Bengaluru-based Swytchd is working to increase EV adoption by offering electric cars and bikes on a monthly subscription model thereby removing the need to own it.
EV charging infrastructure is another point of concern for the electric vehicle transition. As of January 2023, India is reported to have 5254 public charging stations catering to a total of 20.65 lakh electric vehicles.
State of EV funding in India
Electric vehicles are a booming segment in India with plenty of opportunities. Increased electric vehicle adoption and success stories from the startup ecosystem have garnered interest from private market investors.
According to Electric Vehicles India – Feed Geo Report by Tracxn, the Indian electric vehicle market raised a total of $1.6 billion across 106 rounds in 2022 making a 117 percent increase from $766 million across 106 rounds in 2021.
The increase in funding in the electric vehicle space has been led by late-stage funding where it raised a total of $1.02 billion in 2022, a significant increase from $456 million in 2021. Early-stage funding also rose to $526 million in 2022 from $202 million in 2021.
In order to further boost the electric vehicle adoption and solve the charging challenges in India, Union Minister of Heavy Industries Dr Mahendra Nath Pandey announced last week the sanction of Rs 800 crores under FAME India Scheme Phase II to set up 7432 public fast charging stations across the country.
The Prime Minister invited industry stakeholders to participate and explore India’s energy sector. “Today, India is the most suitable place in the world for your investment”, he said during the inauguration of India Energy Week 2023, earlier in February.
While investments in the electric vehicle sector have begun to look up, India will need an investment of $180 billion for vehicle production and charging infrastructure deployment to meet the 2030 goals, according to CEEW.
According to the ecosystem stakeholders, the investment opportunity exists not only in the product or EV manufacturing segment but also exists in the EV components market and R&D which will help build a robust supply chain for the ecosystem.
EV Vs Hybrid: What is the best for India?
A common concern among electric vehicle users involves range anxiety, meaning the fear of losing charge before reaching the destination or charging station.
Hybrid vehicles seem to have a solution to this problem as it has both an internal combustion engine and a battery-powered motor allowing the user to switch between the two as required.
Ashish Dokania, Founder and CEO of Green Tiger Mobility, explains that hybrid vehicles form the “bridge towards fully electric vehicle transition.”
“Hybrid vehicles such as PHEVs (Plug-in Hybrid Electric Vehicle) are silently making an intro into the market because the consumers want lesser carbon, lesser cost but at the same time wants to ensure stability, continuity, and complete reliability. PHEVs and SHEVs are strongly catering to that part,” he says.
While hybrid models were possible for three and four wheelers, it wasn’t available for two-wheelers. Bengaluru-based Green Tiger Mobility is addressing this problem with its first-ever dual powertrain for two-wheelers. Green Tiger retrofits the ICE two-wheelers to include electric powertrain which will allow the rider to switch between combustion and electric mode as required.
E-mobility space in India is still in its infancy and there are several aspects to address. Just like the combustion automobile industry, the electric vehicle market too needs time to grow and will expand at its own pace.
(Infographics: Praveen Gusain; Featured image: Unsplash)
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