India’s quest to accelerate electric vehicle adoption is finally receiving support from the public and key stakeholders. Slowly but surely, people are now turning towards electric cars. The main reason for this shift may be the increase in fuel prices because owning an electric car is very cost effective and can save money significantly. Carbon emission and environmental degradation are one of the main reasons for this shift. The next decade is expected to be the heyday of electric vehicle development in India. With battery quantities reduced by up to 73%, electric cars are expected to be as affordable as gas-powered cars.
According to the International Energy Agency, 70 million electric vehicles will be on the road by 2025. The electric vehicle market is supposed to grow at a compound annual growth rate of 36% until 2026. As the market becomes more competitive, it is crucial to consider what it takes to compel the buyer The price-conscious Indian buys an electric car. Most buyers are concerned with three issues- purchase price parity with conventional fuel vehicles, savings in operating and maintenance costs, and the scope or availability of appropriate charging infrastructure.
According to a report by the Observer Research Foundation (ORF), imports account for 84% of India’s demand for oil. Due to the ever-evolving global economy and rising petrol prices, electric car owners can save up to 20,000 rupees per 5,000 kilometers traveled compared to traditional fuel car owners. Furthermore, electrification will reduce vehicle emissions which contribute significantly to air pollutants causing an annual GDP loss of 3%.
The electric vehicle industry in India accounts for 22% of the country’s total production and is the sixth largest in the world. Lithium-ion batteries cost around $250/kWh globally, which is about Rs 5.7 lakh in battery charging alone. Lithium-ion batteries account for half the cost of an electric car, making it more expensive than conventional cars. To meet these challenges, under the Make in India initiative, India has scaled up efficient battery manufacturing and will soon become a battery manufacturing hub. Interestingly, the increased interest from foreign investors will pave the way for overall growth.
These electrical solutions are more cost effective and sustainable in the long run for the average Indian buyer looking for budget friendly options. Although the initial cost of an electric vehicle is slightly more compared to conventional fuel vehicles, the maintenance cost is lower than that of an electric vehicle because it does not have complex combustion engines or moving parts. Road-ready electric vehicles require regular checks of electrical systems, including the battery, motor and electronic components, reducing maintenance costs by nearly 40% compared to ICE vehicles.
Make-in-India pushes for electric vehicles
The Indian government is trying to boost domestic manufacturing by stimulating domestic production and discouraging imports of electric vehicles. In addition, the Ministry of Heavy Industries and Public Enterprises announced a 50% increase in incentives for two-wheeled electric vehicles, from 10,000 rupees per kWh to 15,000 rupees per kWh. Under the new rules, the incentive cap will be limited to 40% of the total price, up from 20%. It has also directed Energy Efficiency Service Ltd (EESL) to acquire 3-wheel electric tricycles for various applications.
These decisions will significantly help manufacturers reduce the cost of electric models, allowing them to compete with gasoline / diesel cars, and in some cases outperform them. In addition, the FAME II catalyst has helped the growth of three-wheeled electric vehicles by lowering the high price tag for three-wheelers powered by Li-ion batteries. The cost difference between a lead-acid battery and a more advanced lithium-ion battery is usually between Rs 100,000 and Rs 200,000 for a 6kWh – 12kWh battery. However, FAME II incentives for lithium-ion battery electric vehicles effectively reduce the price difference.
The Government of India has set a target of 30% electric vehicles on Indian roads by 2025. The necessary charging infrastructure is already underway. The government has approved the construction of 2,636 electric vehicle charging stations across 62 cities across 24 Indian states and union territories as a second phase of the FAME India scheme. It also directed developers to allocate 20% of parking spaces for electric vehicles in all residential and office projects, which will significantly ease electric vehicle owners’ concerns about charging infrastructure.
The electric car market will undoubtedly grow in the coming years. If proper infrastructure is provided and electric vehicles become affordable and available to all consumer groups, it is likely to become one of the highest profitable industries in the Indian subcontinent in the near future.
This article was written by Coret Electric. All opinions are subjective.