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Why Should Foreign Investors Care About India’s Electric Vehicle Industry?

Why Should Foreign Investors Care About India’s Electric Vehicle Industry?

With 100 per cent FDI available, new production centres, and a greater push to improve charging infrastructure, India’s electric vehicle industry is gaining traction. Other growth factors for the Indian EV industry include federal subsidies and policies supporting deeper discounts for Indian-made electric two-wheelers, as well as a boost for localized ACC battery storage manufacture. 

Furthermore, in September 2021, Cabinet authorized a production-linked incentive program for the automotive sector to stimulate the manufacture of electric and hydrogen fuel cell vehicles.

To convert to alternative/less energy-intensive solutions, the global automotive industry is undergoing a paradigm shift right now. India, too, is investing in the transition to electric mobility.

India’s recent policies to accelerate the transition to e-mobility are motivated by the burden of oil imports, rising pollution, and international commitments to address global climate change.

India’s electric vehicle industry has set ambitious growth goals

India’s automobile sector is the world’s fifth-largest, with plans to become the third-largest by 2030. Reliance on traditional modes of fuel-intensive mobility to cater to a large domestic market would not be sustainable. To solve this, federal authorities are designing a “Shared, Connected, and Electric” mobility alternative, with an ambitious goal of achieving 100 per cent electrification by 2030.

India stands to gain on many fronts by shifting to electric vehicles (EVs): it has a relative wealth of renewable energy supplies and a qualified workforce in the technical and manufacturing industries.

According to an independent analysis conducted by CEEW Centre for Energy Finance (CEEW-CEF), India’s electric vehicle market will be worth US$206 billion by 2030 if the country meets its ambitious 2030 objective. This would necessitate a total investment in car production and charging infrastructure of about US$180 billion.

According to another report from the India Energy Storage Alliance (IESA), the Indian EV market will develop at a CAGR of 36% until 2026. During the same period, the EV battery market is expected to develop at a CAGR of 30%.

Launch of the e-AMRIT portal: A one-stop-shop for electric car information.

At the COP26 Summit in Glasgow, India launched the website e-AMRIT – https://www.e-amrit.niti.gov.in/ – which would serve as a one-stop-shop for all information on electric cars. It tackles significant concerns about EV adoption and purchasing, such as charging station locations and EV finance alternatives, as well as investment prospects, government rules, and potential incentives for drivers and manufacturers.

India’s electric vehicle ecosystem and investment prospects

Regardless of the country’s lofty goals, India’s electric vehicle industry is still in 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 per cent foreign direct investment is permitted in this sector.

The federal government is also putting a premium on sustainable mobility, as evidenced by recent amendments to the FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India) scheme to make electric two-wheelers more affordable. As of November 25, 2021, around 1,65,000 electric vehicles had been sponsored under phase two of the FAME scheme, with a demand incentive of INR 5.64 billion (US$75.16 million). In addition, the initiative has approved 6,315 electric buses, 2,877 electric vehicle charging stations worth INR 5 billion (US$66.63 million) in 68 cities across 25 states/Union Territories, and 1,576 charging stations for INR 1.08 billion (US$14.39 million) on nine expressways and 16 roads.

In addition, several production-linked incentive schemes are aimed at fostering a local manufacturing ecosystem to aid in the adoption of electric mobility vehicles. This will be accomplished by encouraging new investments in the development of domestic supply chains for essential technology, products, and auto components.

Incentive programs linked to production

The government announced a Manufacture-Linked Incentive Scheme (PLI) for ACC Battery Storage Manufacturing in May 2021, which will encourage domestic battery production and minimize reliance on imports. This will provide the necessary infrastructure for the EV industry, lowering the cost of EVs dramatically.

The government established a PLI Scheme for the automobile and drone industries on September 15, 2021, to incentivize high-value advanced automotive technology vehicles and products, such as “green automotive production” (see Cabinet press release here).

Existing automotive companies as well as new investors who are not currently in the vehicle or auto component manufacturing business is eligible to participate in the PLI Scheme for the auto sector. There are two parts to the scheme:

  1. i) Champion OEM Incentive Scheme: This is a “sales value-related” incentive program that applies to all segments of battery electric and hydrogen fuel cell vehicles.

  1. ii) Component Champion Incentive Scheme: This is a sales value linked scheme that applies to advanced automotive technology vehicle components, completely knocked down (CKD)/ semi-knocked down (SKD) kits, vehicle aggregates of 2-wheelers, 3-wheelers, passenger vehicles, commercial vehicles, and tractors, among other things.

Emerging Market Players 

Many significant battery manufacturers, such as Amara Raja Batteries, have taken the lead in directing new investments into green technologies, including lithium-ion batteries, as a result of these incentives.

Leading businesses such as OLA Electric Mobility Pvt, Ather Energy, and Mahindra Electrics are rapidly expanding their market presence in response to the opportunity that India’s EV industry affords. Furthermore, governments such as Karnataka and Tamil Nadu are enacting creative and timely investor-friendly laws in addition to constructing the required infrastructure.

Tesla Inc., an American electric vehicle and renewable energy corporation, recently established its presence in India by forming Tesla India Motors and Energy Pvt Ltd in Bengaluru.

Ather Energy, India’s first intelligent electric vehicle manufacturer, relocated its US$86.5 million manufacturing from Bengaluru to Hosur in February 2021. (Tamil Nadu). The facility of Ather Energy is said to have a production capacity of 0.11 million two-wheelers per year.

Ola Electric, a subsidiary of the unicorn Indian ride-hailing start-up Ola, announced in March 2021 that it would build the world’s largest electric scooter plant in Hosur (about a two-and-a-half-hour drive from Bengaluru) over the next 12 weeks for US$330 million, to produce 2 million units per year. Ola Electric plans to increase production to 10 million vehicles per year by 2022, accounting for 15% of the global e-scooter market.

Meanwhile, Ola Electric reportedly sold INR 11 billion (US$149.26 million) in electric two-wheelers over a two-day purchasing window, indicating market demand in India. Scooters can be reserved on Ola Electric’s website, and the next sales window opens on November 1. The electric scooters are made in the Ola Futurefactory in Tamil Nadu, near Krishnagiri.

Greaves Cotton announced its debut into the multi-brand electric car retail industry under the brand name AutoEVMart on September 9, 2021. According to rumours, this platform would provide consumers with a diverse selection of electric vehicles, ranging from Ampere Electric to other EV companies. As a result, AutoEVMart will act as an electric vehicle marketplace in India, offering e-two-wheelers and e-three-wheelers, as well as EV accessories. Greaves Cotton plans to open Bengaluru’s first multi-brand clean tech or electric mobility retail outlets.

Sterling and Wilson Pvt Ltd (SWPL), India’s largest engineering, procurement, and construction firm, recently announced its foray into the Indian electric mobility market. It has formed a 50-50 joint venture with Enel X to launch and build innovative charging infrastructure in India, which will be incorporated on April 1, 2021.

Positive achievements have also been made in the growth of charging infrastructure across the country, with states such as Andhra Pradesh, Uttar Pradesh, Bihar, and Telangana establishing ambitious targets for the deployment of public charging infrastructure to boost electric car adoption.

Local fiscal sops, superior logistics, an investor-friendly government policy, business facilitation through easier access to authorities, supply chain connections, and the availability of adequate land are the main reasons why certain states are doing better than others.

Karnataka was the first state in India to enact a comprehensive EV legislation, and it has since become a hotspot for EV enterprises in India, both in terms of EV and EV auxiliary manufacturing, as well as R&D. Due to its supply ecology, greater land parcels, closeness to ports, and proactive investor support through administrative portals like Guidance Tamil Nadu, Tamil Nadu is also progressing at a noteworthy rate.

Nonetheless, while the electric vehicle industry is expanding, it still has a long way to go to meet the government’s ambitious 2030 target. The pandemic of COVID-19 not only hampered the industry’s advancement but also affected overall market demand.

In some categories, though, the market mood has remained positive. In India, EV sales for two-wheelers climbed by 21% in FY 2020. Sales of electric buses climbed by 50% in the same period. The market for electric automobiles, on the other hand, remained bleak, with a 5% drop. In terms of total EV sales, following a slight setback in 2020, sales appear to be steadily increasing. In January 2021, 15,910 electric vehicles (EVs) were sold in India, with Uttar Pradesh selling the most, followed by Bihar and Delhi.

India’s Electric Vehicle Market: Growth Prospects and Government Policy

Projections

The federal think tank Niti Aayog produced a paper titled “India’s Electric Mobility Transformation” in April 2019, estimating that by 2030, EV sales penetration in India will be 70% for commercial vehicles, 30% for private vehicles, 40% for buses, and 80% for two- and three-wheelers. If met, these goals might result in a net reduction of 14 exajoules of energy and 846 million tons of CO2 emissions throughout the lifetime of the deployed cars. Electric vehicles sold until 2030 can save 474 million tons of oil equivalent, or US$207.33 billion, over their lifetime.

This will assist India in meeting its worldwide goals to reduce carbon emissions and boost the use of cleaner energy and transportation sources, as outlined in the UNFCCC’s Nationally Determined Contributions (NDCs) and the EV30@30 initiative.

Policies implemented.

Policy at the federal level

To encourage the use of electric mobility, several fiscal and non-fiscal measures have been implemented. The following are the details:

NEMMP (National Electric Mobility Mission Plan) 2020: The Department of Heavy Industry (DHI) launched it in 2013 as a roadmap for the speedier development and deployment of electric vehicles in India.

FAME Phase I: The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India) Scheme was notified in April 2015 as part of the NEMMP 2020, to promote the production of electric and hybrid vehicle technology. Demand development, technological platform, pilot projects, and charging infrastructure have all been prioritized. Incentives for demand generation have primarily taken the form of lower purchasing prices.

FAME Phase II: This three-year program, which began in 2019, has a budget of US$1.36 billion and will be used to provide upfront incentives on the purchase of electric vehicles as well as promote the construction of charging infrastructure. FICCI has requested that FAME II be extended till 2025, with short-term boost incentives to encourage demand. This phase focuses on assisting with the electrification of public and shared transportation, intending to support 7,000 e-buses, 5,00,000 e-three wheelers, 55,000 e-four wheeler passenger cars, and one million e-two wheelers through subsidies. In addition, the development of charging infrastructure is encouraged.

FAME Phase II Amendments: On June 11, 2021, the Ministry of Heavy Industry announced additional changes to the FAME II plan to increase customer demand for electric vehicles. The subsidy per electric two-wheeler (Indian-made), which is tied to battery size, has been increased to INR 15,000 (US$204.60) per Kilowatt-hour (KWh) under the amended policy, up from INR 10,000 (US$136.40) per KWh under the previous policy. Furthermore, electric two-wheeler producers can now offer consumers discounts of up to 40%, a major increase from the previous ceiling of 20%. These electric two-wheelers must have a minimum range of 80 kilometres on a single charge and a top speed of 40 kilometres per hour to qualify for a subsidy under the FAME II scheme. These incentives are projected to cut the buying price and boost buyer confidence, resulting in a surge in market demand. Industry stakeholders have praised the regulation changes, predicting that the electric two-wheeler industry will sell over six million units by 2025. However, according to a recent CRISIL research, 95% of India’s e-scooters are ineligible for the FAME II incentive plan since they do not match the eligibility criteria.

  • The Ministry of Power has stated that charging electric vehicles is considered a service, hence EV charging stations will not require a license to operate. It has also created a policy on charging infrastructure to facilitate the adoption of electric vehicles.

  • Green license plates will be awarded to both commercial and private battery-operated vehicles, according to the Ministry of Road Transport and Highways. All battery-operated, ethanol-powered, and methanol-powered transport vehicles will be excluded from the commercial permit requirement, according to the announcement.

  • The Department of Science and Technology has issued a grand challenge for the development of Indian Standards for Electric Vehicle Charging Infrastructure.
  • Niti Aayog (National Institution for Transforming India): The cabinet has authorized the National Mission on Transformative Mobility and Battery Storage, and the mission’s inter-ministerial steering group will be chaired by Niti Aayog’s CEO. The Mission’s goal is to develop a five-year Phased Manufacturing Program (PMP) to help India build large-scale, export-competitive integrated batteries and cell manufacturing mega facilities, as well as localize production across the fully electric vehicle value chain.

Policy for states and union territories

Over 27 states and UTs have developed mobility transformation strategies to provide their inhabitants with safe, inclusive, cost-effective, and environmentally friendly transportation options. While certain states, like Karnataka and Tamil Nadu, have had a head start thanks to well-thought-out public policies, targeted investor incentives, and supportive infrastructure, other governments have also crafted policies to boost market demand and build infrastructure.

Assam just published its Electric Vehicle Policy, 2021, with intentions to phase out gasoline-powered vehicles by 2030. The Assam government will convert all government cars and its public bus fleet to electric vehicles as a first step. In the next five years, the state plans to install 200,000 electric vehicles. The new EV Policy in Assam, according to the Industries, Commerce and Public Enterprises Department, encourages people to transition to electric vehicles. Assam also has several incentives in place to encourage the production of electric vehicles in the state (under the North East Industrial Development Scheme, 2017 and the Industrial and Investment Policy of Assam, 2019).


Indian States’ Electric Vehicle Policies

  • State: Maharashtra  

Maharashtra’s 2021 Electric Vehicle Policy

Key policy objectives 

In July of 2021, a new issue will be released. It’s good until March 31, 2025.

INR 9.3 billion (US$124.97 million) is set aside in the budget.

By 2025, EVs will account for 10% of all new car registrations.

By 2025, Greater Mumbai, Pune, Nashik, Nagpur, and Aurangabad will have achieved a 25 per cent electrification of public transit and last-mile delivery vehicles.

Several purchasing incentives are available for all types of electric vehicles, including e-buses.

Battery recycling incentives are available.

Set up at least one Gigafactory in the state to manufacture Advanced Chemistry Cell (ACC) batteries.

Establish charging infrastructure as well as connect highways across the state. Providing incentives for the installation of charging stations.

  • State: Odisha

    2021 Odisha Electric Vehicle Policy

    Key policy objectives 

In August of 2021, a new issue was released. For five years

By 2025, 20% of all car registrations in the state will be electric vehicles. Two-wheelers, three-wheelers, four-wheelers, and electric buses are the focus segments.

During the policy time, road tax and registration payments are waived.

Incentives encourage the manufacture of electric vehicles and their components, particularly batteries.

Additional incentives for both public and private charging infrastructure installation.

Additional perks for the manufacture of Lithium-Ion batteries.

  • State: Assam

    Electric Vehicle Policy in Assam, 2021

    Key policy objectives 

In September of 2021, a new issue will be released. It’s good for five years.

In Assam, achieve a 25% penetration of electric vehicles in the total number of vehicle registrations.

Support the deployment of 200,000 electric vehicles over the next five years. This target’s sector breakdown is as follows:

o Two-wheeler electric vehicles (EVs) – 100,000 units

o 75,000 electric three-wheelers; and

o 25,000 electric four-wheelers

Provide incentives for the manufacture of electric vehicles and components.

Concentrate on battery recycling policies.

  • State: Gujarat

    Gujarat’s Electric Vehicle Policy for the Year 2021

    Key policy objectives 

In June of 2021, a new issue will be released. Valid until the year 2025.

INR 8.7 billion (US$116.90 million) is set aside in the budget.

Support the deployment of 200,000 electric vehicles over the next four years. This target’s sector breakdown is as follows:

o Electric two-wheelers– 1,10,000 units

o 70,000 electric three-wheelers

o 20,000 electric four-wheelers

The incentives for electric vehicles will be dependent on battery capacity, with up to INR 10,000 (US$134.40) per kWh available.

All-electric vehicles will be exempt from paying registration fees.

Boosting the charging infrastructure in the state through policy incentives.

  • State: Rajasthan

    Policy for Electric Vehicles in Rajasthan, 2021

    Key policy objectives

In July 2021, a new issue was released. Valid till the 31st of March, 2022.

All-electric vehicles acquired before March 2022 will be eligible for a refund of the State Goods and Services Tax (SGST).

Electric two-wheelers and three-wheelers will receive an additional buying incentive.

  • State: West Bengal

    Policy for Electric Vehicles in West Bengal, 2021

    Primary Policy Objectives

On the 3rd of June, 2021, a certificate was issued. Valid for five years from the date of notification.

During the policy implementation phase, the state should have one million electric vehicles across all segments.

In the next five years, the goal is to install 100,000 public/semi-public charging stations.

Achieve an eight-to-one EV/public charging point ratio.

Recycling and reusing old batteries, as well as properly dumping unwanted batteries, are all environmentally friendly options.

The “EV Accelerator Cell” will be established.

DISCOMs can help with public charging infrastructure for electric vehicles.

  • State: Meghalaya

    Electric Vehicle Policy for Meghalaya, 2021

    Key policy objectives 

In March of 2021, a new issue was released. Valid for five years from the date of notification.

Incentives are being offered to encourage the adoption of at least 15% of electric vehicles in the state during the next five years.

20,000 electric vehicles should be adopted during the policy implementation term.

All types of electric vehicles purchased during the policy term will be exempt from registration and road tax.

The first 3,500 electric two-wheelers priced below INR 150,000 (US$2016.06) will receive a purchase subsidy of INR 10,000 (US$134.40) per kWh.

For the first 200 electric three-wheelers priced below INR 500,000 (US$6720.20), a purchase incentive of INR 4,000 (US$53.76) per kWh is available.

The first 30 hybrid four-wheelers priced below INR 1.5 million (US$20,160) will receive a purchase subsidy of INR 4,000 (US$53.76) per kWh.

Encourage private investment to improve charging infrastructure.

Batteries should be reused and recycled wherever possible.

  • State: Andhra Pradesh

    Policy on Electric Mobility (2018-23)

    Key Policy Objectives

The goal of one million electric vehicles by 2024 is a key governmental goal.

By 2024, the goal is to have 100,000 slow and fast EV charging stations.

In the planned capital city of Amaravati, the government aims to ban the registration of petrol and diesel cars by 2024.

By 2024, all government vehicles will be electric, including corporations, boards, and government ambulances.

  • State: Delhi NCT

    Policy for Electric Vehicles in Delhi, 2020

    Key policy objectives

Aims to have at least 50% of all new stage carriage buses procured for the city fleet be electric buses by 2020, commencing with 1,000 e-buses.

By 2024, the goal is for 25% of new car registrations to be electric.

Two-wheelers will receive a purchase incentive of INR 5,000 (US$68) per kWh of battery capacity, with a maximum incentive of INR 30,000 (US$409) per vehicle.

Scrapping and de-registering outdated, severely polluting two-wheelers are rewarded with a monetary incentive.

For the first 1,000 electric four-wheelers (cars) registered in New Delhi after the policy was issued, a purchase incentive of INR 10,000 (US$136) per kWh of battery capacity was offered (up to a maximum incentive of INR 150,000 (US$2,039) per vehicle).

Owners of e-autos, e-rickshaws, and e-carts will receive a purchase incentive of INR 30,000 (US$409) per vehicle.

  • State: Karnataka

    2017 Policy on Electric Vehicles and Energy Storage

    Key policy objectives

By 2030, all three- and four-wheeled goods-moving vehicles will be encouraged to switch to electric power.

1,000 electric buses will be introduced by local public transportation bus fleets.

Aim to install 112 electric vehicle charging stations in Bengaluru.

Focus on establishing an e-mobility venture capital fund and establishing a secondary market for batteries.

Incentives for EV manufacturing companies, such as interest-free loans on net SGST.

  • State: Kerala

    2019 Electric Vehicle Policy

Key policy Objectives

Key policy goals include delivering one million electric vehicles to the state by 2022 and 6000 electric buses to public transportation by 2025.

Funding to bridge the viability gap for e-buses and the government fleet.

Tax reductions, road tax exemptions, toll charge exemptions, free permits for fleet drivers, and free parking are all examples of incentives.

Prioritize the production of electric vehicle components.

  • State: Telangana 

2020 Policy on Electric Vehicles and Energy Storage Solutions

Key policy objectives 

For first time buyers of electric vehicles, there is a complete exemption from road tax and registration fees.

By 2025, EV sales are expected to reach 80% of two- and three-wheelers (motorcycles, scooters, auto-rickshaws), 70% of commercial automobiles (ride-hailing businesses such as Ola and Uber), 40% buses, 30% private cars, and 15% electrification of all vehicles.

By 2025, EVs in shared mobility, EV production, and charging infrastructure development will have created 20,000 jobs.

  • State: Uttar Pradesh 

Manufacturing of Electric Vehicles and Mobility Policy in 2019

Key policy objectives 

Rolling out 1 million electric vehicles across all segments by 2024 is a key governmental goal.

By 2030, the state hopes to have 1,000 electric buses on the road.

By 2030, the goal is to achieve 70% electrification of public transportation on specified green routes in ten EV cities (Noida, Ghaziabad, Meerut, Mathura, Agra, Kanpur, Lucknow, Allahabad, Gorakhpur, and Varanasi).

By 2024, 0.2 million slow and fast charging and swapping stations will have been installed.

Establishes a single-window approval procedure for all essential approvals for EV and battery manufacturing plants.

  • State: Madhya Pradesh 

2019 Electric Vehicle Policy in Madhya Pradesh

Key policy objectives 

Rapid EV adoption and contribution to 25% of all new public vehicle registrations by 2026 are key policy goals.

New internal combustion engine (ICE) vehicles will no longer be registered in several cities.

Ensure a safe, inexpensive, and accessible charging infrastructure to encourage rapid adoption.

Incentives for shared e-rickshaws and electric auto-rickshaws include free permits, a five-year exemption/reimbursement from road tax/vehicle registration fees, and a five-year waiver on parking fees at any municipal corporation-run parking facility.

  • State: Tamil Nadu 

2019 Electric Vehicle Policy

Key policy objectives 

By 2030, electrify 5% of buses annually, and convert shared mobility fleets, institutional vehicles, and e-commerce delivery and logistics trucks to electric cars.

Within ten years, convert all auto-rickshaws in six major cities to electric vehicles.

To stimulate electric vehicle start-ups, create venture financing and business incubation service hubs.

EV-related and charging infrastructure manufacturing units will be excluded from paying electricity taxes entirely until 2025.

  • State: Uttarakhand 

2018 Infrastructure Policy on EV Manufacturing, EV Usage Promotion, and Related Services

Key policy objectives

By 2030, the goal is to electrify 100 per cent of public transportation, including e-buses; shared mobility, including e-bikes and e-taxis; and goods transportation, employing electric two-, three-, and four-wheelers and other micro goods transport vehicles in five priority cities.

For five years from the beginning of commercial production, there will be no power duty and no stage carriage permit.

For the first 100,000 electric vehicle purchasers, the motor vehicle tax is waived for five years.

  • State: Bihar 

Bihar’s 2019 Electric Vehicle Policy Draft

Key policy objectives: 

Prioritize the electrification of rickshaws as a policy goal. By 2022, the goal is to convert all paddle rickshaws to e-rickshaws.

Promotion of the production of e-rickshaws.

Install fast-charging stations every 50 kilometres on state and national highways, as well as charging stations in business and residential areas.

  • State: Himachal Pradesh 

2019 Electric Vehicle Policy Draft

Key policy objectives: 

Aims for a complete transition to electric vehicles by 2030.

The proposal encourages the development of a dedicated charging infrastructure and includes provisions for charging stations in commercial buildings.

The Electric Vehicle Industry’s Challenges

  • Inadequate charging infrastructure: In 2019, India has only 650 charging stations compared to China’s 0.3 million. One of the main reasons why customers are hesitant to buy electric vehicles is a lack of charging infrastructure.

  • High costs: Along with range anxiety (km/charge), the current high price of EVs is a big worry among potential customers. Electric cars in the same segment tend to be more expensive than lower-end (internal combustion engine) ICE cars. This is primarily due to the increased expense of the technology used in EVs, which accounts for a significant amount of the cost, leaving little room for other features often seen in luxury vehicles. With improved R&D and market competitiveness, it is envisaged that the pricing factor will be rationalized in the future to fit price sensitivity, which is a primary factor affecting purchasing in India, particularly in the lower-end car category. With the latest announcement of incentives, EVs in the two-wheeler market is expected to become more affordable. Since the government’s goals have shifted to sustainable, clean electric mobility, industry experts anticipate a similar effort to ease the uptake of other electric vehicles, such as cars and buses, shortly.
  • Limited Options: Customers have a restricted choice of products to pick from because the business is still in its infancy in India. Increased investment in the sector will eventually make it more competitive, resulting in increased demand.
  • Lower Mileage: Because the business is still in its infancy, there is a lot of room for R&D. EVs are currently not cost-competitive for the average customer in India, as internal combustion engine (ICE) vehicles are more cost-effective.
  • Higher reliance on imports: One of the issues driving up the cost of EVs in India is the country’s reliance on imports of batteries and other components.
  • Grid issues: Once EVs become ubiquitous, another problem is the cost of charging them at private charging stations. According to Brookings India, even with a decent penetration of EVs, the increase in electricity demand is expected to be around 100 TWh (terawatt-hours), or roughly 4% of total power generation capacity, by 2030. As a result, expanding power-producing methods is required to fulfil the increased demand.

Important Takeaways

Finally, the availability of capital for original equipment manufacturers, battery manufacturers, and charge point operators, as well as improvements in infrastructure and a diverse range of consumer options, will determine the size of India’s EV market.

By FY 2030, India’s EV aim will necessitate a total annual battery capacity of 158 GWh, presenting substantial investment opportunities for investors. At this point, enabling policy support measures are critical.

This appears to be something that the government is aware of. It has been implementing PLI plans to promote market demand in priority categories such as electric two-wheelers, as well as localizing production of critical components such as ACC battery storage, electric cars, and auto components. 

Moreover, some Indian governments have now implemented EV laws aimed at attracting industry investment and making EV adoption more realistic for the consumer market.

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