The Electric Vehicle(EV) Market In India

12 min readAug 14, 2021

The Internal Combustion Engine vehicles are the major source of particulate matter, carbon monoxide and nitrogen dioxide. The above-cited gases are very harmful to human beings and the environment. According to the Environmental Protection Agency, nearly 95% of the carbon monoxide emissions comes from motor vehicle exhaust. According to the BP Statistical Review of World Energy, India generated 2.4 million tonnes of carbon dioxide in the year 2020. According to the World Air Quality Report published by IQ Air in the year 2020, 22 out of the top 30 most polluted cities in the world were from India. This calls for a need for an alternative and sustainable transportation system in India. Electric Vehicles are touted to be the future in the Indian automobile sector. Now let’s analyze the electric vehicle market in India.

The Electric Vehicle Sector In India

India is presently the 5th largest automobile market in the world. It’s been stated that India would become the world’s third-largest automobile market in 2030. The Indian Automobile sector caters to a vast domestic market that is predominantly fuel-intensive. This is quite not sustainable.

**India’s Transition To Electric Vehicles From Gasoline-Based Vehicles**

The Indian automobile sector and the policymakers are aiming for an ambitious goal of 100% electrification by 2030. By making a transition towards electric vehicles, India can leverage the available manpower in the automobile and manufacturing sector. According to the CEEW Centre for Energy Finance (CEF), the Indian EV market will be valued at US$ 206 billion by 2030 provided the right policies and technologies are implemented towards achieving the ambitious goal of 100% electrification. To achieve an ambitious goal of 100% electrification, India needs to finetune a cumulative investment of approximately US$180 billion in vehicle production and charging infrastructure.

Growth Projections For The EV Market In India

The Niti Ayog published a report titled “India’s Electric Mobility Transformation” in the year 2019. This report predicted that EV sales penetration in India at 70% for commercial cars, 30% for private cars, 40% for buses, and 80% for two- and three-wheelers by 2030. If these above-specified targets are reached by 2030, then it could lead to a net reduction of 14 exajoules of energy and 846 million tons of Carbon Dioxide emissions. Electric vehicles sold until 2030 save nearly 474 million tons of oil equivalent over their lifetime which is worth US$207.33 billion. The Indian Electric Vehicle Market was valued at USD 5 billion in 2020.

Existing Electric Vehicle Ecosystem And Investments In India

Despite India’s ambitious goal of 100% electrification of the transportation sector by 2030, the EV Revolution in India is still at its nascent stage. The Union Government of India has announced a 100% Foreign Direct Investment permitted through automatic route in the EV Manufacturing sector. This would enable the manufacturer to sell its Electric Vehicles all over the country through wholesale and/or retail, including through e-commerce, without approval from the Government. As a part of the 2015 Paris Agreement, the Union Government is committed to reducing the Greenhouse Gas Emission of its GDP by 33% to 35% over 2005 levels by 2030. The Union and State governments are working together to transition towards a clean and sustainable transportation system by implementing policies like Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) II to make sure that the EVs are made affordable.

**Production-Linked Incentive Scheme (PLI) for ACC Battery Storage Manufacturing**

On 12th May 2021, the Union Government of India announced the implementation of the Production-Linked Incentive Scheme (PLI) for the ACC Battery Storage Manufacturing Scheme. Advanced Chemistry Cell(ACC) refers to the latest cutting edge technology used to store electric energy, either as electrochemical or as chemical energy, and convert it back to electric energy as and when required. The ACC is not just for electric vehicles but for other renewable energy technologies as well. They have sanctioned US$2.49 Billion for the implementation of the Production-Linked Incentive Scheme (PLI) the for ACC Battery Storage Manufacturing scheme. This scheme has an ambitious goal of establishing a local manufacturing capacity of 50 Giga Watt Hour (GWh) of ACC and five GWh of Niche ACC capacity. The Production-Linked Incentive Scheme (PLI) for ACC Battery Storage Manufacturing Scheme aims to reduce India’s dependence on foreign technologies in the domain of battery technology and accelerate EV adoption in India. The scheme also aims to nurture the Research & Development(R&D) sector predominantly working to achieve higher specific energy density and cycles in ACC.

**AMARON Batteries From Amara Raja Batteries Ltd**

Amara Raja Batteries Ltd is one of India’s leading Lead-Acid battery manufacturers based out of Andra Pradesh. On 14th July 2021, they announced that they would be setting up a Giga factory under the Production-Linked Incentive Scheme (PLI) for ACC Battery Storage Manufacturing Scheme announced by the Union Government of India to venture into manufacturing of lithium-ion batteries.

Leading automobile companies like Tata Group, Mahindra Group, OLA Mobility Pvt, Toyota, MG Motors, Ather Energy and other leading automobile stakeholders are striving to capture the Indian EV market. India is home to nearly 250 Electric Vehicle based companies. Tamil Nadu and Karnataka are leading the way in generating investments in the EV sector. In January 2020, Tata AutoComp Systems entered into a joint venture with Beijing-based Prestolite Electric to foray into the EV Component Market.

Lithium Urban Technologies is India's first zero-emission transport service, with a fleet of Electric Vehicles (EVs) and associated charging infrastructure supported by leading technologies like analytics, telemetry and GIS. In March 2020, they partnered with a renewable energy solutions provider, Fourth Partner Energy, to build versatile charging infrastructure.

**Mahindra & Mahindra signed an MoU with Israel-based REE Automotive to collaborate and develop commercial electric vehicles**

REE Automotive is an Israel-based company reinventing EV Platforms. They work towards the design and assembly of electric and autonomous vehicles. In September 2020, the Mahindra & Mahindra Group signed a Memorandum of Understanding(MoU) with REE Automotive to develop commercial vehicles.

In October 2020, Toyota Kirloskar Motors announced an investment of US$272.81 Million in India directed towards the development of electrical components for EVs. In the very same month, MG Motors announced investing US$135.3 Million to launch new models in India. In October 2020, Ultraviolette Automotive, a manufacturer of electric motorcycles in India, raised a disclosed amount in a Series B investment from GoFrugal Technologies, a software company.

TESLA is one of the world’s most favourite EV companies based out of the USA. Owning a TESLA car have been considered a symbol of luxury. In January 2021, TESLA INC registered its subsidy Tesla India Motors and Energy Pvt Ltd in Bangalore. TESLA is also aiming to set up a full-fledged manufacturing unit in India. I am eagerly waiting to see TESLA Cars hit the Indian Roads.

Ather is one of India’s favourite Electric Two-Wheeler brands. These Ather Scooters are well known for their advanced technology-driven implementation. In February 2021, they decided to move their US$86.5 million manufacturing facility from Bengaluru to Hosur. They have unveiled a 123,000 sq ft manufacturing facility at Hosur with an ambitious goal of manufacturing 110,000 scooters and 120,000 battery packs annually.

OLA Electric Scooter

OLA is a household name when it comes to booking taxis for inter and intracity trips. Now they have stepped up their game by foraying into the Electric Two-Wheeler sector. OLA Electric Mobility Pvt Ltd has been working towards building the World’s Largest Electric Scooter Manufacturing Facility at Hosur, Tamil Nadu at a staggering cost of US$ 330 Million to produce two million units annually. They have also got the leading design and management stakeholders from various parts of the world to conquer the Global Electric Two-Wheeler(E2W) market. By 2022, they are aiming to produce ten million units annually.

When it comes to Electric Vehicle Charging Infrastructure, India has 26 companies in this domain working at a domestic and commercial level. Battery swapping technology is still at a nascent stage in India. Companies like SUN Mobility, Lithion, E-ChargeUp Solution, VoltUp, Numocity, Ola Electric, ACME and Estimo are predominantly working on the battery swapping technology in India.

Policy Drivers

The Union and the State Governments have been working towards nurturing and creating an environment favourable for the production and sales of Electric Vehicles of all types catering to a wide range of customers. To know more about the Union and State Level EV Policies in detail, read my blog titled “Policy Drivers That Lead To The Growth of The Electric Vehicle(EV) Sector In India”.

Policy Drivers That Lead To The Growth of The Electric Vehicle(EV) Sector In India

Policy Drivers are considered as one of the key aspects that promote the growth and development of a business sector in…

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On June 11th 2021, the Second Phase of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India) Scheme was amended to increase the sales of EVs and reduce the range anxiety. Under the revised policy, the subsidy per electric two-wheeler (Indian-made), which is based on the battery size, has been increased to INR 15,000 (US$204.60) per Kilowatt-hour (KWh) from INR 10,000 (US$136.40) KWh. Furthermore, electric two-wheeler manufacturers can now give discounts of up to 40 per cent to consumers, which is a significant increase from the previous cap of 20 per cent. The revised eligibility criteria for these electric two-wheelers to qualify for a subsidy under the FAME II scheme include a minimum range of 80 km on a single charge and a minimum top speed of 40 km per hour. In February 2021, Minister of Heavy Industries & Public Enterprises Prakash Javadekar has announced that there would be an EV charging station for every 4x4 km in leading cities to solve the range anxiety crisis.

The Effect of The Indian Policy Drivers On Electric Vehicle Sales From January 2021 to July 2021

In India, the first seven months of 2021 witnessed higher EV sales as compared to that of EV sales of the entire 12 months of the year 2020. The Indian EV Manufacturers sold 121,170 units of EVs of all types in a period of 7 months from January 2021 to July 2021 which is higher than the annual 2020 annual EV sales of 119,647 units. The month of July 2021 witnessed a record high monthly sales of 26,157 units as compared to that of the monthly sales of the last two years.

**Number of EVs Sold(Source: Economic Times Graphic Credits: SmallCaseHq)**

The above-cited facts show that the Indian EV Market has been affected by the deadly COVID-19 Pandemic. The Indian EV Market has been on recovering from the setback. The improvement in the Indian EV Market to the right moves by the policy-making stakeholders at the Union and State Government levels. The Automotive Stakeholders strongly believe that the right amount of investment coupled with the right decisions by the Indian policymakers can put the Indian EV Market leading the world.

In an episode of BW Hotwires, Chetan Maini sir, the co-founder and chairman of SUN Mobility said ,“If we put the right policies and investments in place, India can be the EV exporting hub 5 Years from today.”

Challenges Faced By The Indian EV Market

The EV Policies by the Union and State Governments look futuristic. The success of these EV Policies might be hindered by various challenges existing in the EV Market. These challenges can pose a critical threat to India’s ambitious goal of 100% electrification of the transportation sector. The challenges are as follows:

Lack of Charging Infrastructure: India is a perfect market for EVs but the lack of charging infrastructure might dent India’s 100% electrification in the transportation sector. In a country like India, I can easily find a petrol bunk for my IC Engine Vehicle in any Indian city. On the other hand, finding a charging station in a city is an uphill task. India has only 970 charging stations in 28 states in India while a country like China has nearly 3,00,000 charging stations.
Range Anxiety: Range Anxiety is yet another challenge. Many of the Electric Cars in India have a range greater than equal to 300 km in a single charge but this comes at a very heavy price. The same applies to Electric Two Wheelers whose range exceeds 100 km in a single charge but they are indeed expensive. On the other hand, the IC Engine automobiles and motorcycles have better mileage as compared to the range of an electric vehicle. This is because the EV Revolution in India is still at its nascent stage. Emphasis on R&D is required.
Cost Factor: At present, the number of EVs being manufactured annually is lesser than that of the number of IC Engine automobiles manufactured. This tremendously increases the cost. The parts involved in EVs are quite expensive. The manufacturing processes involved in producing the EV Components is also expensive. This tends to increase the cost of EVs.
Poor Service Network: When an IC Engine Vehicle encounters a technical issue, the issue can be resolved even by a street-side mechanic provided the Vehicle is not an imported one. On the other hand, Electric Vehicles lacks a well built and organized service network like IC Engine Automobiles. If an EV owner encounters a technical issue, the person has to head to the showroom only to get it sorted. One of the major reasons for this barrier in the EV is the deep-tech that is quite complicated for an ordinary mechanic. The OEM manufacturers for EVs in India are very small in number.
Lack of Choices Available For the Customers: In the case of Electric Two Wheelers, the customers have only two choices. It's either a scooter or a bike. The electric bike is more expensive than an electric scooter. On the other hand, electric cars under the price of 1 Million Rupees is not ergonomic enough for a family. An ergonomic electric car is always priced at more than 1 Million Rupees. This tends to prevent consumers from procuring EVs.

Conclusion

The EV Revolution in India is at its nascent stage. From my perspective, here are some feasible solutions that can implement in order to make India a hub for EVs. The feasible solutions are as follows:

There is a need for adequate financial and technical support for the R&D wing working towards improving the range of an EV.
The EV Industry must work towards the mass production of supercapacitors that have superior performance as compared to the conventional EV Battery Pack Materials.
There is a strong need for collaboration between academia and automobile stakeholders.
The academic stakeholders must include electric vehicles as a part of the academic curriculum in automobile and allied engineer branches. This would make the engineering graduates employable enough to work in the EV Sectors.
The number of charging stations in the city and the highways must be increased to reduce the impact of range anxiety.
The Government must work with the private automobile stakeholders to make are that the EVs can reach the rural areas as well
The OEM for EVs must be easily available. Sohinder Gill, the CEO of Hero Electric Vehicles said “Providing incentives and tax benefits for manufacturers and OEMs who are willing to increase localization levels on their products will not only reduce reliance on imports but also massively drive down costs of EVs”
The EVs must be made as per the International Norms of Safety. The EVs must be designed ergonomically.
The Indian EV market must not only cater to the mobility needs of the urban areas but also the rural areas of India.
Certificate training courses in the service of EVs can be conducted by the leading EV stakeholders for the mechanics.