Rising EV: The State Of EV Sector In India

India is riding fast toward its goal of carbon neutrality by the year 2070. Naturally, the transportation sector, one of the biggest polluters, has to be brought under green cover if the nation wants to reduce the emissions intensity of its GDP by 45 per cent by 2030 – a medium-term goal. The electric vehicle has become a promising candidate for the future of green transport. Just like the rest of the globe, India is embracing this new tide of change for the renewable future of its mobility. So, what is the current state of the EV sector in India?

Several factors are working as catalysts driving India to accelerate the transition to e-mobility – the increase in prices for oil imports, rising pollution, and international pledges to battle global climate change. India’s seriousness with EVs can be understood from the fact that the South Asian country last year at the CoP26 Summit committed to having at least 30 per cent of private automobiles as EVs by 2030. The said deadline isn’t too far now and needs a reflection on the state of the EV sector in India today and the measures the country is taking toward its goal.

What’s the Status of EVs in India?

Before looking at the state of the EV sector, let’s take a broader view of India’s automobile sector. The $222 billion Indian automobile sector currently ranks fifth globally, and the policymakers expect it to rise and clinch third by the decade’s end. In addition, the country is also the world’s largest producer of two and three-wheelers, and the second-largest manufacturer of buses. India is also the biggest producer of vehicles like tractors. These numbers give the Indian market opportunity to reduce substantial emissions by greening its mobility.

As on August 3, 2022, over 13,92,000 EVs were running on Indian roads. Of these, the three-wheeler (e3W) formed a majority of share – over 7,93,000 electric vehicles. The total number of the two-wheeler (e2W) category accounted for over 5,44,000 EVs, while the four-wheeler (e4W) and above category stood at around 54,200. Further, the sale of EVs in FY 2021-22 have gone up over three times compared to EVs in FY 2020-21. From 1,34,460 (e2W:41048, e3W-88391 and e4w-5021) in 2020-21 sales grew to 4,28,224.00 (e2W: 2,31,434, e3W: 1,77,884, e4W:18,906) in 2021-22.

Expected Growth in Near Future

By 2030, the number of EVs on road is expected to increase – 45-50 million EVs – while annual sales are expected to reach 10 million per annum, clocking a Compound Annual Growth Rate (CAGR) of 49 per cent between 2022 and 2030. In monetary terms, the EV market in India is estimated to value at $2 billion by 2023 and $7.09 billion by 2025.

Government Initiatives

Government measures are critical for any technology to find a foot in the market. The Indian government has been implementing several programmes to encourage the growth of electric mobility. These include a 100 per cent FDI through the automotive route in the EV space, incubator programmes, shared facilities for prototyping and small-scale manufacturing, financial support through the Credit Guarantee Scheme for Start-ups (CGSS), tax breaks, and subsidies for consumers.

The Production linked incentive (PLI) scheme (with a ₹25,938 crore budget) for the automotive industry was at the helm of driving growth to reach the current state of the EV sector in India. Creating a healthy environment for EV startups to thrive, the PLI scheme suggests financial incentives of up to 18 per cent to encourage domestic production of high-tech automotive products. It also promotes the domestic manufacture of EV batteries, while curtailing reliance on imports.

The increase in the sale of EVs is also attributed to the incentive provided under FAME India Scheme Phase-II. It provides an upfront reduction in the purchase price of electric vehicles. Under Phase-II of the FAME-India Scheme, ₹1000 Cr has been allocated for the development of charging infrastructure as well. Under FAME India Scheme I & II, a total of 532 charging stations have been installed as of July 15, 2022 (479 under FAME-I and 53 under FAME-II).

These state measures encouraged private players to make endeavours in the EV sector.

Growing Interest of Private Players

Many conventional automotive players and oil companies have been investing heavily to boost EV demand in India. For instance, Skoda revealed its plan to produce EVs locally in India in 2021. Indian Oil Corporation also stated its plans to create 22,000 EV charging stations over three to five years, helping EV adoption.

In 2021, the investments in EV startups were record high, rising by about 255 per cent to reach $444 million. Some of the major EV firms receiving investments in 2021 include Ola Electric ($253 million), Blusmart ($25 million), Simple Energy ($21 million), Revolt ($20 million), and Detel ($20 million). About 500 startups spanning the whole EV value chain make up the Indian EV ecosystem, with 63 per cent of those startups solely dedicated to manufacturing.

India’s efforts already started delivering. The highway between Delhi and Chandigarh is the first in the nation to be made e-vehicle friendly by Bharat Heavy Electricals Limited (BHEL). It commissioned 20 Solar-based EV Chargers. Talking about the EV chargers, the total number of charging stations increased by about 285 per cent year over year in the financial year (FY) 2022. Oil Marketing Companies (OMCs) as on July 01, 2022, established 3448 electric vehicle charging stations at their Retail Outlets (ROs). Government measures will further boost expansion to 4 lakh charging stations by FY 2026.

A Tip For The Private Players: Indian EV Sector is a Good Investment Opportunity

The incontestable potential for EVs in India has already attracted heavy investments in the sector. From around $6 billion in investments in 2021, it is expected to increase to $20 billion by 2030.

The Automotive Mission Plan (AMP) 2016–26 has brought the goals of the Indian government and the automotive sector to one agreement. In a scenario going according to the plan, the industry is expected to contribute more than 12 per cent of the nation’s GDP, of which 7.1 per cent has already been achieved until now. It further aspires to constitute at least 40% of the manufacturing sector by the end of 2026. Needless to say, in a world where the EV sector is expanding at an enormous rate, EVs will be critical to realising the goals of plans like AMP.

Lithium-ion battery production plans in India will be instrumental in lowering EV costs in the country, facilitating further growth. A sign of a significant market in India.

Though a little late, India has shown great excitement in the EV segment. The increasing battery safety and range of EVs are clearing the clouds of uncertainty that partially marred the prospects of EV growth in the country. Indeed, the Indian EV industry Further, steps like the e-AMRIT portal – a one-stop destination for all EV-related information like charging location, investment opportunities, policies and subsidies in the sector – are facilitating growth by engaging stakeholders in the industry.