Electric Vehicles Market in India

Introduction
The global electric vehicle (EV) market is developing at a rapid pace. According to EV volumes, overall electric vehicle reached a global share of 8.3% (including battery electric vehicles [BEVs] and Plug- in hybrid electric vehicles [PHEVs]) in 2021 from 4.2% in 2020 with 6.75 million vehicles on the road. This is an increase of 108% as of 2020. EVs are gaining attention across the globe as they help reduce emissions and depletion of natural resources. The Indian EV market is also evolving fast as close to 0.32 million vehicles were sold in 2021, up 168% YoY. Ongoing electric vehicle adoption in India is based on the Paris agreement to reduce carbon emissions, to improve the air quality in urban areas and reduce oil imports.

Electric Vehicle Sales Trend in India (2020-21)

Source: EV reporter

EV Market in India
The Indian automobile industry is the fifth largest in the world and is expected to become the third largest by 2030. As per India Energy Storage Alliance (IESA), the Indian EV industry is expected to expand at a CAGR of 36%. As population rises and demand for vehicles grow, dependence on conventional energy resources is not a sustainable option as India imports close to 80% of its crude oil requirements. NITI Aayog aims to achieve EV sales penetration of 70% for all commercial cars, 30% for private cars, 40% for buses and 80% for two and three-wheelers by 2030. This is in line with the goal to achieve net zero carbon emission by 2070. Over the last three years, 0.52 million EVs were registered in India, according to the Ministry of Heavy Industries. EVs recorded robust growth in 2021, supported by the implementation of favourable policies and programmes by the government.

In India, Uttar Pradesh held the highest share in EV sales in 2021, with the number of units sold across all segments reaching 66,704, followed by Karnataka with 33,302 units and Tamil Nadu with 30,036 units. Uttar Pradesh dominated the three-wheeler segment, while Karnataka and Maharashtra led the two-wheeler segment and four-wheeler segment, respectively.

State -Wise-EV Sales Trend in 2021

Source: EV Reporter

Hero Electric, Okinawa and Ather Energy controls the electric two-wheeler market in India with a combined market share of 64%. Hero Electric has a market share of 36% followed by Okinawa with 21%. Ather Energy with an 11.1% market share is slowly gaining market share, as the company is currently expanding its distribution network across India. In the passenger vehicle segment, Tata Motors enjoys a commanding position in electric vehicle space with a market share of 71%, led by their two key models, Nexon and Tigor EV. MG Motors India enjoys the second position and offers the longest-range EV (MG EZS provides 439 KM range on a single charge). Other Indian manufacturers have announced their models and is expected to be launched in the future.

Source- Cardekho, gaadiwaadi, e-vehicle info.,Rushlane.

Key Policy Initiatives – Growth Levers
The Government of India has always been at the forefront of framing policies related to EV adoption in the country. Few of the programmes launched by the government to increase EV adoption are shown below:

Business Opportunities
The EV push in India opens a plethora of business opportunities across three key segments – mobility, infrastructure and energy. These include opportunities in EV franchising, EV OEM market, battery infrastructure, solar vehicle charging and battery swapping technology among several others. According to NITI Aayog, the complete transition to EVs requires a total investment of US$ 267 billion (Rs.19.7 lakh crore) in EVs, battery infrastructure and charging infrastructure.

According to the Ministry of Skill Development and Entrepreneurship (MSDE), the EV industry could add 10 million direct jobs by 2030 which would create 50 million indirect jobs in the sector. Several automobile companies have plans to participate in the EV industry as listed in the table below:

• FAME India Scheme: Faster Adoption & Manufacturing of (Hybrid &) Electric Vehicles (FAME) India was launched in 2015 for promoting growth and early adoption of hybrid and electric vehicles in the country. FAME-II scheme was launched in India with a budget outlay of US$ 1.3 billion (Rs. 10,000 crore) to support 1 million e-two-wheelers, 0.5 million e-three -wheelers, 55,000 e-passenger vehicles and 7,000 e-buses. The government extended the scheme until 2024, as announced in Union Budget 2022-23.
• PLI Scheme: The government introduced Production Linked Incentive for Advanced Chemistry Cell Battery Storage (PLI-ACC) scheme. The scheme is expected to boost India’s battery infrastructure. As per the Union Budget, the total outlay for the scheme is US$ 2.45 billion (Rs 18,100 crore), which would be disbursed to beneficiaries over five years once the manufacturing facility is set up.
• Battery Swapping Policy: A wide-spread charging infrastructure is essential for EV adoption. In this regard, on April 22, 2022, NITI Aayog released a draft battery swapping policy which will be valid until March 31, 2025. The policy will be implemented over a period of 1-2 years from the date of launch of the policy and will cover all metropolitan cities with a population greater than four million. The second phase will be implemented over 2-3 years from date of launch of the policy and will cover all UT’s and major cities with a population greater than 5,00,000.

• Other Initiatives-
  • Tax exemption of up to Rs.1,50,000 (US$ 1,960) under section 80EEB of income tax while purchasing an EV (2W or 4W) on loan.
  • Reduction of customs duty on nickel ore (key component of lithium-ion battery) from 5% to 0%.
  • State- wise reduction of road tax and other incentives.

Business Opportunities
The EV push in India opens a plethora of business opportunities across three key segments – mobility, infrastructure and energy. These include opportunities in EV franchising, EV OEM market, battery infrastructure, solar vehicle charging and battery swapping technology among several others. According to NITI Aayog, the complete transition to EVs requires a total investment of US$ 267 billion (Rs.19.7 lakh crore) in EVs, battery infrastructure and charging infrastructure.

According to the Ministry of Skill Development and Entrepreneurship (MSDE), the EV industry could add 10 million direct jobs by 2030 which would create 50 million indirect jobs in the sector. Several automobile companies have plans to participate in the EV industry as listed in the table below:

Conclusion
The Indian EV Industry is slowly gathering momentum, supported by government initiatives and rise in crude oil prices, as people look for alternative sources to reduce their monthly bills. However, a mass shift from internal combustion engine (ICE) vehicles to EVs requires expansion of infrastructure facilities, including charging stations, and vehicles that could provide a higher range (KM range with a single charge). Several initiatives taken by the government to support the manufacturing and adoption of electric vehicles in the country should help in achieving the target of a 100% EV adoption by 2030.