Demystifying India's electric vehicle ambition

Globally, the automotive industry is on the verge of major transformations. Ever-growing urbanization expedites the demand for vehicles. And this increase in vehicles is significantly creating environmental impact. While countries around the world are exploring sustainable ways to address such challenges, the introduction of electric vehicles seems to bring sustainable mobility. India is leapfrogging in the electrification of its transport landscape, requiring a robust ecosystem and conducive environment.     

Urbanization in India is currently on the rise as rural populations move to cities in the hunt for employment. This significantly puts pressure upon the energy and transport infrastructure leading to congestion and pollution. Robust EV policy can boost the country's economy and reduce pollutions in cities.

Currently, the electric vehicle revolution in India is largely being led by two-wheelers and three-wheelers. A KPMG report predicts that there will be 25-35 percent electric two-wheeler penetration, and 65- 75 percent in electric three-wheelers by 2030, with passenger vehicle electrification following. The report further noted that to drive EV adoption in the country, OEMs and the government, both at the state and central levels, need to work collaboratively to build an integrated policy, creating a conducive ecosystem for India’s electric mobility vision.

India's EV Policy

India's transport sector accounts for 18 percent of total energy consumption. It also contributes an estimated 142 million tonnes of CO2 emissions annually, of which 123 million tonnes is contributed by road transportation alone. Thus, to meet the country's pledge taken at the COP21 to lessen emissions by 33-35 percent by 2030, the government needs to view electric mobility as a viable alternative to climate change impacts.

Currently, more than ten states in India have final or draft EV policies that support the national electric mobility policies. Andhra Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, New Delhi, Tamil Nadu, Telangana, Uttarakhand, and Uttar Pradesh have approved EV policies. On the other hand, Bihar, Gujarat, Himachal Pradesh, and Punjab have draft policies. Almost all of these state EV policies stress two and three-wheelers, public transportation, and job creation.

Through its EV policy that was approved in 2018, Andhra Pradesh aims to deploy 1 million electric vehicles on the road by 2024, with 1 lakh slow and fast charging stations establishments. Bihar where EV policy was drafted in June 2019 and the approval is awaiting prioritizes electrification of rickshaws by 2022. Gujarat also plans to have 1 lakh EVs on the road by 2022. The policy in the state, which was drafted in September 2019, is still waiting for approval.

State of EVs in India

According to the Society of Manufacturers of Electric Vehicles, EV sales in India, excluding e-rickshaws, raised by 20 percent in 2019-20. It reported that over 1.56 lakh EVs – 3,400 electric cars and 600 electric buses, were sold in the country during FY2019-20, compared to 1.3 lakh units in the last FY. 

The government's steps into the EV revolution in the country are crucial. They have undertaken multiple initiatives to promote the manufacturing and adoption of electric vehicles in India. The current ruling government has set a target of 30 percent adoption of EVs by 2030.

If the country will succeed in achieving its 2030 EV ambitions, the EV market in India will top US$206 billion, according to CEEW Centre for Energy Finance (CEEW-CEF). The Centre estimated a cumulative investment need of US$180 billion in vehicle production and charging infrastructure until 2030 to meet the ambition. It also predicts that the cumulative EV sales in all vehicle segments could cross over 100 million units by the projected timeframe, an increase of 200 times its current market size. Conversely, NITI Aayog projects that the Indian EV industry can add around US$300 billion by 2030 cumulatively.

Tata Motors, Hero Electric, Mahindra Electric, Ather Energy, Hyundai Kona electric, Ashok Leyland, MG Motor, among others are the leading players in all-electric vehicles in India. The recent entry of Tesla is now expected to revolutionize EV adoption in the country.