Two- and three-wheelers to lead India’s electric vehicle journey: ICRA

While global automotive demand declined during CY2020 due to Covid-19 related impact, EVs remained the bright spot with approximately 40% growth over the previous years.

By:May 27, 2021 11:11 AM
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The trade pundits as well as those in the know-how of electric vehicles have always said that three-wheelers will spearhead the Indian EV journey. It is because these vehicles have to travel less distances, carry more load and generally will make do with a day worth of charge. Now a report from the Investment Information and Credit Rating Agency (ICRA) confirms this. ICRA further adds that the two-wheelers too will play a major role in electric vehicle adoption. By 2025, ICRA says, the electric two-wheelers will account to 8-10 per cent of the total EV sales whereas over 30 per cent of the three-wheelers will be battery-powered. ICRA further says ” While global automotive demand declined during CY2020 due to Covid-19 related impact, EVs remained the bright spot with approximately 40% growth over the previous years. Globally, EVs now account for 4.4% of new car sales during CY2020 and their share is likely to cross 5% level in CY2021. ICRA believes that while the transition to EVs is inevitable, the pace of penetration will be relatively gradual in India unlike global markets like China, Europe, and USA.

The reason behind saying that two- and three-wheelers will be the shining stars in the EV revolution is because of their lower dependency on commercial charging spots. Moreover, most of the three-wheelers come with swappable batteries, should the commute be a bit longer. Running an electric vehicle is much cheaper than even a CNG-operated one. ICRA also says that unlike China which has vastly developed its public electric charging infrastructure, India will take several years to reach that stage. However India, according to ICRA, can still continue to sell electric two- and three-wheelers.

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Shamsher Dewan, VP and group head, corporate sector ratings, ICRA said

The development of local manufacturing of batteries, critical components and charging infrastructure would remain critical for incentivizing the local EV ecosystem, which is currently weak, reducing costs and improving overall acceptability of EVs in the country. ICRA expect the recently announced production linked incentive (PLI) scheme for auto components and ACC batteries to provide much needed impetus for localising manufacturing in the sector. While dependency on imported battery cells will continue in the medium term, Indian companies can focus on localizing other parts including motor and controller in the near term followed by localization of battery management system and other electronics over the next 3-5 years

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