Trade Analytics


Leapfrogging into the ‘electric mobility’ era

September 9, 2018

India has set new benchmarks with its ambitions for migration towards electric vehicles, which makes economic as well as environmental sense

In January 1886, Mannheim-based engineer Carl Benz applied for a patent for a gas-powered vehicle, in which he had installed a high-speed one-cylinder four-stroke engine with 954 cc displacement, running at 400 rpm, an output of 0.55 kW/0.75 HP and a maximum speed of 16 km/h. This three-wheeled patent motor car was an absolute world first: a totally self-contained, self- propelled vehicle powered by an internal combustion engine 1. Officially the world’s first ‘automobile’, it was a pivotal moment in the history of mobility globally.

According to data from automotive business intelligence firm Jato, automotive sales across 52 markets reached 86.05 million (including LCVs and passenger cars) in 2017, a growth of 2.4% y-o-y 2 . Automotive sales for India increased by 8.8% year-on-year to reach 3.61 million during the year, closing the gap with Germany that had sales of 3.71 million and year-on-year growth of 3% 3.

Over 130 years since the first automobile, the world stands at another critical inflexion point with the looming crisis of climate change due to greenhouse gas (GHG) emissions. The impact of our choices on the planet merit critical evaluation and bold decisions for the future of energy consumption. The Paris Agreement, to which India is also a signatory, has set a target of “limiting the increase in the global average temperature to well below 2°C above preindustrial levels and pursuing efforts to limit the temperature increase to 1.5°C above preindustrial levels” 4 . Automotive emissions account for around 23% of global GHG emissions and therefore cutting emissions in this sector will be critical for the targets to be achieved 5

The Future is Electric

Electric vehicles have emerged over the past few years as a highly viable solution towards ‘decarbonisation’ of transportation. Due to this, policy makers across the world are taking bold decisions for their widespread deployment. A forecast by Bloomberg New Energy Finance (BNEF) projects that electric vehicle sales will grow from 1.1 million in 2017 to 11 million in 2025 and 30 million in 2030 6 . The report further estimates that there would be around 559 million electric vehicles on roads by 2040, accounting for 33% of all cars and 55% of new car sales by that year, thereby displacing 7.3 million barrels of transport fuel per day 7 .

For oil importing countries like India (which has an oil import dependency of over 80% 8 ), electric mobility provides enormous economic benefits as well. India’s oil import bill is estimated at US$ 87.7 billion in 2018, a growth of 25% year-on-year 9

Click to Zoom

The first policy initiative for EVs in India was the National Electric Mobility Mission Plan 2020 (NEMMP 2020) announced in 2013, which laid out a sales target of 6-7 million for electric and hybrid vehicles per annum after 2020. In 2015-16, the Government of India launched the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme in its Union Budget 2015-16. The scheme identified four focus areas - technology development, demand creation, pilot projects and charging infrastructure. In Phase 1, the Government made an allocation of Rs 75 crore and Rs 122.9 crore in 2015-16 and 2016-17 respectively 10 . The scheme was extended to March 2018 and subsequently to September 2018 11 . By the end of 2017-18, a total of 186,870 vehicles had been supported under the electric vehicle scheme, enabling fuel saving of 27.22 million litres 12 . The Government of India is shortly expected to announce Phase 2 of the FAME policy.

A Sunrise Industry

During his speech at the Global Mobility Summit MOVE organised by NITI Aayog on September 7, 2018, the Hon’ble Prime Minister of India Shri Narendra Modi outlined a vision for the future of mobility outlined by 7 Cs - Common, Connected, Convenient, Congestion-free, Charged, Clean and Cutting-edge. On the potential for electric vehicles, he said, “We want to drive investments across the value chain from batteries to smart charging to Electric Vehicle manufacturing… We want to build India as a driver in electric vehicles (EVs) 13 .” On September 6, Hon’ble Minister for Road Transport & Highways Shri Nitin Gadkari announced during a conference organised by Society of Indian Automobile Manufacturers that the Government was planning to do away with permits for EVs as well as vehicles powered by alternate fuels like ethanol, methanol, bio-diesel and CNG 14 . He also asserted that India should aim to take the share of electric vehicles to at least 15% in five years 15 .

Market leader Maruti Suzuki showcased its first electric vehicle prototype at the MOVE Summit and is planning to commercially launch four EVs by 2020 in association with Toyota 16 . Similarly, other vehicle makers like Tata Motors (electric bus), Hyundai (Kona electric SUV), Mahindra (Triao electric three-wheelers) and Nissan (Leaf electric car), showcased their models at the summit.

Comparison of running costs of Electric and Petrol Two-Wheelers



(LSS)( Lead Acid)


Ex showroom Price (Rs)*




Fuel consumed in running 50 km/ day

1.5 units of electricity

1.5 units of electricity

1 litre of Petrol

Cost of fuelling for per 50 km run (Rs.)




Duration of Ownership (years)




Total running in 5 year (km)




Average Maintenance for 5 years (Rs.)




Cost of Refueling for 5 years (Rs.)




Battery Cost for 5 years (Rs.)




Cost of running for 5 year (Rs.)




Saving in 5years (Rs.)




CO2 Reduction by using EVs in 5 year (Metric Tons)




*New Delhi Source: Society of Manufacturers of Electric Vehicles

In order to grow demand sustainably, India needs to urgently set up robust charging infrastructure. The Government plans to support the setting up of charging infrastructure at every 3 km in major cities and highways across India initially 17 . If India achieves the target market share of 30% for electric vehicles by 2030, it could mean a business of around Rs 42,000 crore for the electric vehicle charging business, and a network of around 60,000 to 100,000 charging stations across India by that year depending on how India scales up in this sector 18 .

Electric vehicle costs are getting more and more affordable, with costs of Lithium-Ion batteries dropping from US$ 1,000 per kWh in 2010 to US$ 200 per kWh in 2017. Experts state that EVs will be comparable on costs to ICE vehicles when the cost of batteries drops to US$ 100 per kWh, a feat that is expected to be achieved in another 2 years 19. Bloomberg New Energy Finance projects that India’s passenger EV sales could increase at an exponential rate to 30,000 in 2022 compared to 2,000 units in 2017 20 .

Given the low levels of vehicle penetration at present, India has a huge opportunity ahead to leapfrog into the clean energy era of mobility, without having to traverse the economically inefficient and environmentally hazardous path taken by developed countries.


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