Electric vehicle trends

GROUND ZERO MONITOR- EV TRENDS UNVEILED

India is currently the third-largest automobile market in the world. The electric vehicles industry is at a nascent stage in India. EV sales are now at around 3-5 percent of the total and India is dubbed as the fastest-growing electric vehicle market. In 2023, sales of electric vehicles grew around 49 percent year-on-year to 1.53 lakh units, with two-wheelers leading the race. Around 7.6 lakh electric vehicles are expected to have been registered in the country till now.

Optimistic projections indicate that the Indian EV market, valued at US$3 billion in 2023 could surge to US$7.09 billion by 2025. Industry estimates also forecast the domestic EV market to achieve 10 million annual sales by 2030. Meanwhile, the Economic Survey of India 2023 had forecast a robust 49 percent compound annual growth rate (CAGR) in India’s domestic electric vehicle market between 2022 to 2030, with an estimated 10 million annual sales by 2030. Projections indicate that the EV industry is set to generate approximately 50 million direct and indirect employment opportunities within the next seven years.

By 2030, the government intends to have an electric vehicle (EV) sales penetration of 30 per cent for private cars, 70 per cent for commercial vehicles and 80 per cent for two and three-wheelers, Mr. Nitin Gadkari, Minister of Road Transport and Highways (MoRTH), stated in 2021.

During COP26, India unveiled its ambitious de-carbonization target for 2030. This entails reducing carbon emissions in the energy sector by 50 percent and attaining 500 gigawatts of renewable energy generation capacity by the year 2030, while also becoming a part of the global EV30@30 campaign. To achieve this, India aims to triple its current renewable capacity, targeting the goal of ensuring that electric vehicles (EVs) account for at least 30 percent of new vehicle sales by 2030.

A graph showing global EV sales by scenario, 2020-2030. Yellow depicts India’s share in EV sales. source: International Energy Agency

There are a multitude of factors that shape the automotive industry leading to the current position and visibility. These factors will determine the dynamics of the EV industry in the next decade.

Poor supply side focus

It is difficult to connect the dots between the government’s target for 30 per cent private fleet electrification by 2030 and a solitary buyer’s decision, mostly driven by cost and convenience. The government’s FAME initiative mostly covers the demand side. But the EV penetration will happen when the demand side and the supply side that is the OEM side is both tied up.

PANDEMIC EFFECT UNEMPLOYMENT

COVID-19 has caused a dent in the overall economic set up with respect to the no COVID-19, possible growth versus the realized growth. The EV sales depends upon the disposable income matrix of the target segments. That has seen a drastic fall attributed to unemployment and an overall decline in the market sentiments.

INFRASTRUCTURE & CHARGING STATIONS ISSUES

Second a marked increase in vehicle purchases can be observed only if more driving and parking space in tier-1 and tier-2 cities is created and a thriving road infrastructure with PCS (public charging stations) are set up and abound. In the current circumstance, if a person needs to go a long distance because his e-vehicle has a low charge. His options for recharging are quite limited. In India, there are around 70,000 filling stations spread among 718 districts. A gas station may be found every 5-6 kilometers. On the other side, there is only 12146 electric vehicle charging outlets. A person driving an electric vehicle will have a difficult voyage in such a circumstance. A recent Confederation of Indian Industry (CII) report emphasized the necessity of establishing at least 1.32 million charging stations in India by 2030 to facilitate the rapid growth of electric vehicles, requiring over 4,00,000 installations annually.

CHINESE IMPORTS

Global Trade research initiative (GTRI) has claimed that Chinese companies are aggressively thriving to grab the EV markets worldwide, and are being pushed and buoyed by the Chinese government to do so. The renewed and continual policy push in India to make India a hub for EV’s will enhance dependency on Chinese imports. India’s imports of auto components were $20.3 bn in 2022-23 and 30 percent of it came from China. The entry to the Indian market under the wake of declining anti subsidy probes and increased trade restrictions over the export of subsidized cars and batteries (China produces 75% of the world EV batteries) in the EU and USA markets, infuses a breath of renewed hope for China and unleashes problems for the Indian market in the face of indigenization.

MICRO ECONOMIC IDENTITY

Considering India’s northwards oil bills, the transition to clean energy opens up a world of economic opportunities for the country. But, it is imperative to note that the government’s macro-economic decisions should not ignore the micro-economic identity of the country. 100 per cent fleet electrification is ideal, the rationale is optimizing the fleet.

EV & BATTERY COST/SAFETY

Consumers in India are looking for a lower price for EVs than those in other countries, with the global average tipping price for EVs being $36,000. (~ Rs27 lakh). The cost of lithium-ion batteries is roughly $250/kWh globally, which translates to approximately Rs5.7 lakh in battery prices alone. The safety of the batteries against explosion serves as a stumbling block for Li-ion batteries. Charging is a significant barrier for EVs in India, and a lack of charging stations may also be considered, rendering them impracticable or significantly less feasible for long-distance rides. Furthermore, some EVs are slower than standard gas-powered engines.

LACK OF SKILLED WORKFORCE

In terms of electric cars, India has a trained labor shortage. The technology is new, and prominent educational institutions are unable to adapt to the world’s developing EV technology.

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DEMYSTIFYING THE EV GROWTH

Easily said than done, when it comes to fancy numbers for EV growth we have to take it with a pinch of salt. The EV market is drenched in market forces that have multi-lateral and multi-dimensional implications, which can be retrogressive as much as progressive. An independent analysis by the clean air and sustainable mobility team at the Centre for Science and Environment, a Delhi-based non-profit, revealed that there will be annual EV sales of 2.05 million in 2030. This analysis is based on the total vehicle and EV sales trends observed since 2012. The International Energy Agency also estimates annual EV sales of 1.9 million in India by 2030.

Thus the market may grow at a steady pace of 5-6% CAGR instead of a skyrocketing trajectory with 65-66% CAGR, as long as there are no other major factors of disruption such as hydrogen or ammonia based fuel vehicles and highly efficient ICE vehicles that will pave the way for a new world order where all thrive an survive in tandem.