EV Industry On The Road To Goal 2030

Dr Irfan Khan, Founder & CEO, eBikeGo

The Government wants India to be a 100% electric vehicle nation by the year 2030.  Under the new government plan, every car that is sold in India from 2030 will be electric. Due to the competitive environment in the market, India’s auto industry has become one of the largest in the world. Several steps have been taken in this direction, such as the introduction of the National Mission on Electric Mobility in 2011 and subsequently, National Electric Mobility Mission Plan (NEMMP) 2020 which was unveiled in 2013. Additionally, the Department of Heavy Industry has formulated a scheme namely FAME – India (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) for implementation with effect from April 1, 2015, which was part of the mission.

Government Initiatives

India’s national mission for electric mobility and faster adoption and manufacturing of electric vehicles (EVs) looks to have received its much-required shot in the arm. Thanks to a few key amendments established by the Department of Heavy Industry (DHI) in June 2021 to the FAME-II Scheme, the EV momentum saw notable revival and gained pace, especially in the wake of the remarkable slowdown experienced due to the ongoing COVID-19 pandemic. At the same time, FAME II has been extended to March 2024 from the former timeline of March 2022 wherein it is intended to carry the hybrid/electric vehicles market development and its manufacturing eco-system to achieve self-sustenance at the end of the stipulated period. The scheme has four focus areas, which entail demand creation, charging infrastructure, technology development, and pilot projects.

Why We Should Embrace EVs

An electric car uses alternate fuel electricity in place of petrol or diesel. There is a developing acceptance for hybrid and electric cars in the country and more and more manufacturers are going for the niche segment with an objective of lowering the import bill of fuel and running cost of vehicles. The conversion of vehicles to electric vehicles can save fossil fuels worth about $100 bn per year, which in turn prevents the dependence on imported petroleum products which would save the country precious foreign exchange and will also reduce the pollution in cities by 80-90%.

The government’s ambition is to have EV sales accounting for 30% of private cars, 70% for commercial vehicles and 80% for two- and three-wheelers by 2030 as there is an instant need to decarbonise the transport sector. If electric vehicles expand to 40% in the car segments and two-wheeler, and close to 100% for buses by 2030, India would be able to cut crude oil consumption by 156 million tonnes which is worth ₹3.5 lakh crore.

The government introduced the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) Scheme, with an expenditure of INR 10K Cr. It aims to give the required push to EVs to curb pollution afflicting major cities and cut down on oil imports. FAME has put a healthy number of electric buses, 2W, 3W, and some BEV and mild hybrid cars on Indian roads. In FY 2019, more than 750K EVs were sold with a total of 7, 59,600 units, which include electric passenger vehicles (3,600, electric three-wheelers (6,30K), and electric two-wheelers (126K).

Goal 2030

By 2030, the government plans to have EV sales penetration of 40% for buses, 30% for private cars, 70% for commercial vehicles, and 80% for two- and three-wheelers. The Road Transport and Highways Minister Nitin Gadkari pointed out that NITI Aayog has inspired 25 States to come up with EV policies, out of which 15 have already announced State EV policies in the wake of the EV mission.

A study by Arthur D Little, titled ‘Unlocking India’s electric mobility potential’ anticipates that by year 2030, more than 30 percent of vehicles in India will be electric. The study also highlights that by 2030, the EV industry will cross 10 million vehicles with an adoption rate of 30 percent across categories. However, the study also emphasises that passenger cars will only amount to 5 percent of total EV sales.

Further, the study suggests that by 2030, India will require approximately 800 GWh of batteries to be able to attain 30% EV adoption. To achieve this, the country is accelerating plans to manufacture lithium-ion cells, anticipating more than 7.5 billion USD in investment potential and USD 2.3 billion in government subsidies.

The EV industry lured $6 billion in investment in 2021, which could grow to $20 billion by 2030. It looks like the EV market is drawing the attention of private equity/venture capital investors in India, and such funding is estimated to grow from $181 million to $1,718 million during the same period – an annual growth rate of 849%. So far, this (PE/VC investment) has reached about $666 million in 2022.