Globally car sales dropped by 16% in 2020, but a strong demand & momentum was seen in the global EV market where around 3 million electric cars were sold. CYH1-21 sales were dominated by mainland China and Europe. China saw 1.1 million vehicles being sold with Europe being behind by just 10,000 EVs. The research report concluded by stating that it believes EVs are now the vehicles of the future and has the ability to power us ahead.

The shooting price of fossil fuels and stringent vehicular emission regulations by the Indian government are major drivers of the sharp growth of in the EV market over the forecast period. The government is also rapidly developing sustainable charging infra and has announced various demand and supply incentives. India’s Department of Heavy Industry (DHI), under the National Electric Mobility Mission Plan (NEMMP) 2020, has formulated the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme to support the development of both Hybrid Vehicles (HV) and Electric Vehicle (EV) markets as well as that of their manufacturing ecosystems. This was followed up with FAME II and added incentives.

A report states that EV technology evolution in India requires sizable investment in R&D and product development, both on the automobile platforms and battery/charging technology. Collective investment done by 2W, 3W, 4W, EV component makers and last mile delivery companies was recorded at Rs. 25,000 crore during January– July 2021.

EVI should contribute to making India –

• Reduce fossil fuel dependency
• A global electric manufacturing hub
• Substitute imports & increase exports
• Manufacture via Made or Make in India
• A country with clean & healthy natural resources

EV sales are expected to jump 200 times its current market size of just half a million as on March 2020. There have been a number of reputed studies (NITI Aayog, CEEW-CEF, RBSA Advisors, KPMG, etc.  ) conducted internationally on the EV industry scenario and here are some of the projections to meet India’s EV ambition:

• India’s EV market is expected to touch US$ 150 billion
• 39% of new vehicles sold will be electric vehicles by 2030
• The Cumulative EV sales is to cross over 100 million by FY 2030
• An estimated annual battery capacity of 158 GWh is required by FY 2030
• Indian EVs will be a US$ 206 billion – Rs 14,42,000 crore – opportunity by 2030
• Government incentives are a must for vehicle production & charging infrastructure
• The cumulative investment needed is over US$ 180 – 200 billion – Rs 12,50,000 crore
• The BEV segment dominated in 2020 & is anticipated to be US$ 116.80 billion by 2030
• India’s electric vehicle market is to grow at a CAGR of 90% to touch US$ 150 billion by 2030
• The shift to EV could help India save nearly one giga-tonne of carbon dioxide emissions by 2030
• The passenger cars segment is expected to expand at a CAGR of around 106% which the highest
• India needs about 400,000 charging stations for 2 million EVs that could ply on the roads by 2026
• Government to set up EV kiosks across 69,000 petrol stations & permit sales & registration of EVs without batteries.
• NITI Aayog – 70% of commercial cars, 30% of private cars, 40% of buses & 80% of 2-wheeler & 3-wheeler (3W) sales would be electric by 2030
  
  

Battery Production
Even if 50% of the battery manufacturing capacity were indigenous (Domestic), investments would amount to US$ 6.1 billion – Rs 42,900 crore by FY 2030. The cumulative investments for batteries required would exceed $12.3 billion – Rs 85,900 crore in case of 100% indigenisation (Made in India) of battery manufacturing.

Charging Infrastructure
India would need a network of over 2.9 million public charging points by FY 2030, beyond the in-home charging points. This would require investment of up to US$ 2.9 billion – Rs 20,600 crore until 2030. Currently, there are only about 1,800 public charging points across the country.

Finance & Operating Costs
Opportunities exist in the automobile loan market too. If 50% of the EV upfront costs – US$ 103 billion – Rs 7,21,000 crore – required through FY21-FY30 were to be financed through debt, the banking sector would have to more than triple its current advances of US$ 31 billion – Rs 2,17,000 crore – towards vehicle loans in the next 10 years. Distributing all the upfront costs as well as operating costs (including fuel, maintenance, and insurance) into equal annual costs – a method called annualization – would help navigate the challenge of high upfront purchase cost. The solution could help create a track record of performance and repayments and thus help with the creation of a vibrant loan market for EVs.

Central & State Government Policies
India needs development of policies around battery reuse, recycling and leasing to help bring down the high upfront cost of EVs. To encourage uptake of EVs, state EV policies must be announced which combine incentives for EVs with disincentives for internal combustion engine (ICE) vehicles. Availability and affordability of capital for OEMs, battery manufacturers, charge point operators, and end consumers would be key to determining the pace, efficiency and cost of India’s transition to electric vehicles. Consistent policy support would also be critical. The recently approved production-linked incentive (PLI) scheme for the automobile and battery manufacturing sectors could help enable the right ecosystem for indigenisation and job creation in the EV sector.

Huge Future Potential & Foreign Investment
Many conventional and also new entrant automotive manufacturers have offerings for various EV market segments. The Indian EV market was unaffected by the outbreak of the pandemic. India’s registration of new electric passenger cars increased by 109% y/y in 2020, with 5,905 new vehicle registrations noted during the year. This can be attributed to subsidies, tax benefits, government investments in EV infra, restrictions on vehicular CO2 emissions, increasing preference of consumers towards EVs over ICE vehicles, etc. The Indian EV market is estimated grow at a CAGR of 90% and in terms of penetration, EV sales accounts for barely 1.3 per cent of total vehicle sales in India during 20-21. This shows the huge potential to expand and grow the market.

The spike in demand for EVs has also attracted overseas investments. Ola electric raised US$ 200 million from a clutch of investors in a fresh funding round, valuing the company at more than US$ 5 billion. Similarly, TPG Rise Climate & Abu Dhabi’s ADQ also agreed to invest close to US$ 1 billion in Tata Motor’s upcoming EV subsidiary. The electric scooter rental start-up Bounce is reportedly making investments of about US$ 100 million – Rs. 742 crore – across manufacturing of e-scooters & expanding the battery swapping infrastructure. Many start-ups have raised an initial round of funding and are likely to go in for stabilization by seeking further rounds of funding. Finally, according to an international automotive executives survey carried across the world – 53% are confident that there will be more profitable growth, in comparison to the 38% who concern themselves about profit prospects.