The Challenges For The EV Market In India

9 min readApr 21, 2021

The automobile sector in India accounts for 49% of the manufacturing GDP and 7.1% of India’s GDP[1]. As a part of the Paris Agreement, India has been striving forward to reduce the Greenhouse Gas (GHG) per GDP by 33% — 35% over 2005 levels by 2030. In order to reach this goal, the government of India is keen to shift the transportation system towards electric vehicles (EVs). The EV market in India is anticipated to be valued at $2bn by 2030. In this article, the challenges for the EV Market In India would be discussed.

The EV Market In India

According to the KPMG-CII Report titled “Shifting gears: the evolving electric vehicle landscape in India” stated that electric vehicles (EV) are emerging as a disruptive force, with several players experimenting with and discovering new innovative business models and use cases. It is anticipated that there would be 25% to 35% of EV penetration in the two-wheeler segment by 2030. It would be 65% to 75% of EV penetration in the three-wheeler segment by 2030. The 4 wheeler passenger vehicle (PV) electrification is expected to follow, with 10 to 15 per cent penetration in the personal segment and 20 to 30 per cent in the commercial one by 2030. About 10 to 12 per cent of the overall market for buses is expected to be electrified by 2030 [2].

The Challenges For The EV Market In India

The future for EVs in India looks very bright according to the KPMG-CII report[2]. There are a set of hurdles or challenges that prevent the EV market in India from reaching soaring heights. The challenges are as follows:

Inadequate charging infrastructure
Reliance On Battery and Other EV Components from Foreign Countries
Range anxiety among consumers
The high price of EVs currently and the lack of options for high-performance EVs
Lack of quality maintenance and repair options

The above five challenges might be really exciting for technocrats and entrepreneurs. These challenges are worthy enough for startups to encash upon. In the forthcoming paragraphs, I would be explaining all the challenges in detail. At the end of the article, I would present you with an amazing opportunity for the innovative and serious EV startups to encash upon.

Inadequate Charging Infrastructure

According to the CEA (Central Electricity Authority) Report of 2020[3], India has 933 charging stations, various PSUs, discoms, municipal corporations and state-run PowerGrid. 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. It’s always easy to find a charging station in the city but this is not the same in the case of rural areas and highways. The EV charging stations are not adequately distributed in India. According to a McKinsey report, even at a moderate rate of adoption of the EVs in India by 2030 where about 11 million battery EVs would account for a third of overall vehicle sales in the country. For such a situation, India needs 5 million EV charging stations which comes at a cost of US $6 Billion[4]. This is indeed a serious concern for India’s growth in the EV market. This challenge holds an amazing opportunity for EV Startups to venture into.

Reliance On Battery and Other EV Components from Foreign Countries

In the year 2019–20, India has imported batteries worth $1.2 billion[5]. India’s keen interest in renewable energy storage and increasing demand for EVs are the key factors that would push our demand for batteries in the forthcoming years. The lead-acid batteries would be obsolete in the Indian market in the next 5 years. EVs predominantly use Lithium-ion batteries. The major reason behind India’s reliance on Battery imports is the lack of battery manufacturing centres in India[6]. Off lately about 14,1000 tons of Lithium reserves have been found in Karnataka in India. Rare Earth Elements (REE) like lithium, nickel, cobalt or graphite are being used in the batteries. These need to be mined from extremely large depths. Mining such REE has been causing a lot of pollution. According to the Chinese Society of Rare Earths, to obtain 1 tonne of REE, 75 tonnes of acid waste is produced along with 1 tonne of nuclear waste[7]. China is the only country that manufactures NdFeB magnet, which is an integral component for manufacturing the electric vehicle. Many other components like batteries are being imported from other countries. The increasing demand for EVs creates an opportunity for business stakeholders to venture into the battery sector.

Range Anxiety Among Consumers

We measure the potential of an IC Engine Two Wheeler by its mileage. Mileage is expressed in kilometres per litre in India. If I say my bike has a mileage of 60 kmpl that means I can travel 60 km with one litre of petrol and if my bike has a 5-litre petrol tank with a mileage of 60 kmpl, I can travel 300 km. On the other side, Range is a term analogous with mileage in the case of EVs. The word Range in EVs means the distance the EV can travel with a single-full charge. The range of the EVs is quite lower than the mileage of the IC Engine vehicle. This becomes a major issue when your EV runs out of charge and you don’t find a charging station nearby. This is quite an anxious situation for EV owners. This is one such situation that no EV owner would ever wish to be caught in. The EV range can be improved by either improving the battery technology or making more charging stations available in various parts of the country. The range anxiety and lack of charging infrastructure would dent India’s dreams of becoming global leaders in the EV market.

The high price of EVs currently and the lack of options for high-performance EVs

Buying an EV is quite an expensive affair in a country like India. The Government of India has announced an incentive is linked to battery capacity i.e. Rs. 10,000/kWh [8]. From August 2020, the Government of India has reduced the GST on EVs from 12% to 5% [9]. Despite this incentive and tax reductions, EVs are still expensive to own. The average starting price of an Electric Two-Wheeler (E2W) in India is Rs1,50,000. A normal four-wheel EV costs more than Rs 7,00,000. These numbers look huge and therefore many abstain from buying EVs.High-performance EV cars and E2Ws in India is a far-fetched question. Ultraviolette F77 is an Electric Bike with a top speed of 147km/hr but it comes with a heavy price tag of Rs 3,00,000[10]. Despite there are few companies like Atomobile, that sell E2W at Rs50,000. We can’t really see a family four-wheeler EV like the way Maruti 800 was celebrated. The affordability of EVs is quite a challenging aspect. In the journey of making EVs affordable, a company must not compromise on the quality and durability of the parts.

Lack of Quality Maintenance And Repair Options

When an IC Engine Two Wheeler encounters a technical issue, the issue can be resolved even by a street-side mechanic provided the Two-Wheeler is not an imported one. On the other hand, E2Ws lack a well built and organized service network like IC Engine Two-Wheelers. If an E2W owner encounters a technical issue, the person has to head to the showroom only to get it sorted. The same applies to a four-wheeler EV. One of the major reasons for this problem is the deep tech that is involved in EVs which is indeed complicated. OEM parts of EVs are not easily available in the market. There are very few companies that manufacture these OEM parts only for EVs and therefore they are quite expensive. Lack of maintenance and expensive OEM parts might push away consumers from opting to buy an EV.

IS 360 & MASS Foundation

The above-cited challenges in the EV market can tend to attract technocrats and budding entrepreneurs to step in and solve these problems. Funding is quite important for a startup. Transportation accounts for over one-fifth of the global carbon dioxide emission. Out of this one-fifth of the carbon dioxide emission, 74.5% of the transportation emissions come from road transport vehicles. This truly calls for the need for a sustainable transportation system to reduce the carbon emissions from road transportation to zero in the forthcoming years. EVs are playing a vital role in striving towards establishing a sustainable mobility system. EV Revolution has been gaining momentum in the last two years in India. India is home to 250 EV companies. We at MASS Foundation, aim to create awareness about sustainable mobility and its importance in making our lifestyle carbon neutral. We support collaborative ventures to create an EV ecosystem with support from academia, technical, corporate and governmental stakeholders to reduce the carbon footprint globally.

India Startup 360 (IS360)

With immense pleasure, we at MASS Foundation have collaborated with India Startup 360 (IS360). IS 360 is aiming to change the startup ecosystem in India. Startups need Mentors, Money and Markets at the appropriate time and in the right measure. IS 360 aims to provide the Three Ms a startup would need. IS 360 is all set to organize the Startup Expo 2021. This is a virtual event that would allow budding entrepreneurs to meet investors, stakeholders and fellow entrepreneurs.

The event is all set to happen from 7th May 2021 to 9th May 2021. Startups can avail of Collateral Free loans up to Rs. 25.0 lakhs. Public Sector banks like SBI, IOB, IDBI, Indian Bank, Bank of Baroda & Bank of Maharashtra have exclusive finance arrangements with Bharatiya Yuva Shakti Trust (BYST). BYST provides this facility in 12 Clusters across India. Other funding organizations like Ah Ventures, Growth Launchers, Letven Ventures, UK India Startup Corridor & United Business Ventures etc would be taking part in this event.

Providing solution for Pitch Deck Preparation

So what are you waiting for, start preparing for an amazing event with an innovative business idea! Wondering how to prepare for a pitch deck? Register for the Webinar on Pitch Deck Preparation which will be held on 22nd April from 7 pm to 8 pm. The virtual pitch deck at India Startup 360 Startup Expo 2021 dated 7th to 8th May 2021 awaits you with investors ready to fund your dream. To know how to register for the Startup Expo, join the webinar on the 22nd of April! The clock is ticking!