Why EV Adoption in India is Accelerating and What it Means for the Future

EV Adoption in India: 

Challenges and Opportunities Electric vehicles (EVs) are seen as a key solution to reduce air pollution, greenhouse gas emissions and oil dependency in India. The Indian government has set a target of 30% EV penetration by 2030 and has launched various schemes and incentives to promote EV production and consumption. 

However, the current EV market share is only 1% of total vehicle sales in India, and there are many challenges and opportunities for mass EV adoption in the country. 

 Why EVs are important for India 

India is the third-largest emitter of greenhouse gases in the world, after China and the US. According to the International Council for Clean 

Transportation, an estimated 74,000 premature deaths were attributable to air pollution from transportation tailpipe emissions in India in 2015. As the number of motor vehicles on the roads double every 8-10 years in India, CO2 emissions are bound to get worse. EVs promise zero tailpipe emissions and a reduction in air pollution in cities. 

They also offer a lower total cost of ownership (TCO) compared to conventional vehicles, as they have lower fuel and maintenance costs. Moreover, EVs can help India reduce its oil dependency and enhance its energy security, as India imports about 80% of its crude oil needs. If India achieves its goal of 30% EV penetration by 2030, it will generate an estimated saving of up to 474 million tonnes of oil equivalent (Mtoe) and 846 million tonnes of net CO2 emissions over their lifetime. 

 How India is promoting EVs 

The Indian government has created momentum through its Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) schemes that encourage, and in some segments mandate the adoption of EVs. 

The FAME schemes provide demand incentives for EV buyers and manufacturers, as well as support for deploying charging infrastructure in urban centers. Some of the fiscal incentives under the FAME schemes are: Income tax rebates of up to INR150,000 ($2,100) for customers on interest paid on loans to buy EVs Exemption from customs duties for lithium-ion cell batteries to reduce their cost .

Reduction in goods and services tax (GST) rates for EVs from 12% to 5% Subsidies for electric two-wheelers, three-wheelers and buses based on battery capacity .

Allocation of INR10 billion ($140 million) for setting up charging stations across India.

 Apart from the FAME schemes, the government has also launched other initiatives to boost EV adoption, such as: 

● National Electric Mobility Mission Plan (NEMMP) 2020, which aims to achieve 6-7 million sales of hybrid and electric vehicles by 2020 .

● National Mission on Transformative Mobility and Battery Storage, which aims to promote local manufacturing of advanced chemistry cells and batteries . 

● National E-Mobility Programme, which aims to create a policy framework and charging infrastructure to facilitate electric mobility.

● Green Mobility Scheme, which aims to convert existing petrol/diesel vehicles into hybrid/electric vehicles.

What are the challenges:  for EV adoption Despite the government’s efforts and the growing consumer interest in EVs, there are still many barriers and challenges for mass EV adoption in India. Some of them are: 

● Lack of adequate charging infrastructure: 

India has only about 3,000 public charging stations, compared to over 200,000 in China. The availability and accessibility of charging stations are key factors for EV buyers’ decision making. Moreover, there are issues related to standardization, interoperability and pricing of charging services.

● High upfront cost of EVs:

 Even with subsidies and incentives, EVs are still more expensive than conventional vehicles due to the high cost of batteries. The average cost of an electric car in India is about INR. million ($16,800), while the average cost of a petrol car is about INR600,000 ($8,400). The high upfront cost discourages many potential buyers who have low income or credit availability. 

● Low range and performance of EVs: Most EVs available in India have a low range of less than 200 km per charge, which limits their suitability for long-distance travel or inter-city commute. Moreover, some EVs have low speed and power compared to conventional vehicles, which affects their attractiveness for customers who value performance.

● Lack of awareness and consumer behavior: Many consumers in India are not aware of the benefits and features of EVs or have misconceptions about them. For instance, some consumers may think that EVs are not safe or reliable or that they require more maintenance than conventional vehicles. Some consumers may also have a preference for certain brands or models that do not offer EV options.

 What are the opportunities for EV adoption Despite the challenges: there are also many opportunities and drivers for mass EV adoption in India. Some of them are: Growing demand for personal mobility: India has a low vehicle penetration rate of about 20 per 1,000 people, compared to about 150 in China and 800 in the US. 

This means that there is a huge potential market for personal mobility solutions in India, especially among the young and urban population. EVs can cater to this demand by offering affordable and convenient mobility options.

● Increasing innovation and competition: India has seen a surge of innovation and competition in the EV space, with many new players entering various parts of the EV value chain. For instance, there are startups like Ather Energy, Ola Electric, Revolt Motors and Yulu that offer innovative products and services for electric two-wheelers. 

There are also incumbents like Tata Motors, Mahindra & Mahindra and Hyundai that have launched electric cars in India. These players are creating more choices and value propositions for consumers. 

● Supportive policies and regulations: Apart from the central government’s schemes and initiatives, many state governments have also launched their own policies and regulations to promote EV adoption. 

For instance, Delhi has announced a policy that offers incentives for buying electric two-wheelers, cars and buses; waives road tax and registration fees; mandates parking spaces for EVs; and provides loans at low interest rates. Similarly, Karnataka has announced a policy that offers subsidies for manufacturing EVs; exempts road tax and registration fees; provides land at concessional rates; and supports research and development. 

● Environmental awareness and social responsibility: With the growing awareness and concern about climate change and air pollution among consumers, especially the younger generation, there is an increasing preference for eco-friendly products and services.

 EVs can appeal to this segment by offering a green alternative to conventional vehicles that reduces carbon footprint and improves public health. 

Conclusion

 EV adoption in India is at a crucial juncture where it can either take off or stagnate depending on how the challenges are addressed and how the opportunities are leveraged. The government has taken several steps to create a conducive environment for EV adoption but more needs to be done to ensure effective implementation and coordination among various stakeholders.

 The private sector has shown innovation and dynamism in creating value propositions for consumers but more needs to be done to reduce costs and improve quality. The consumers have shown interest and willingness to switch to EVs but more needs to be done to increase awareness and confidence. If all these factors align well, India can become a global leader in electric mobility.