Rajiv.K Vij, CEO and Founder, Plug Mobility
Even though the concept of electric vehicles (EV) in India dates back to 1996, the sector is still nascent, with the first one being sold in 2001. However, interest and innovation have accelerated in the past decade, and India is ready for a major transformation to EVs. The global automobile industry is witnessing a shift to electric vehicles, and India has joined this turn of the tide. New EV ownership models, recent policies and regulations, technological advancements, and the ever-rising fuel prices are some factors pushing the country to adopt EVs rapidly.
The government is keen on eliminating the existing roadblocks by making policy changes to encourage growth in the segment. In Union Budget 2022, the finance minister introduced a battery swapping policy and special mobility zones to boost the industry. The country has set an ambitious target of 70 percent EV sales penetration for commercial vehicles, 30 percent EV sales penetration for private cars, 40 percent for buses, and 80 percent for two- and three-wheelers, by 2030.
With government initiatives favouring electric mobility, there are ample opportunities in the B2B market, and even the consumers are showing interest in EVs. The Indian EV market is expected to touch $150 billion by 2030, growing at a CAGR of 90 percent for the next decade. Even with the booming interest in electric mobility from all corners, it will be the B2B segment driving India’s EV revolution for next 3-5 years.
The global pandemic has changed consumer behaviour and catalysed e-commerce, making people shop online. It has pushed the e-commerce market to expand its fleet to ensure supply to the increasing demand. This is where EVs bring cost savings. Besides being an eco-friendly and efficient solution for last-mile delivery, EVs have several advantages compared to ICE vehicles. First and foremost is the cost of energy/fuel. The cost of maintaining or renting out an EV is much lesser than an ICE vehicle. With the government’s push to promote EV adoption, they have the potential to emerge as vital options for last-mile delivery transportation of passengers and lightweight goods for shorter distances.
However, it is crucial to address the concerns that can dilute the business opportunities in the EV sector. Most fleet owners have suffered immensely during the pandemic and are facing huge challenges in getting vehicle finance. In addition, fleet owners continue to have range anxiety of batteries, uncertainty of residual value as also concerns about safety which have been further pushed because of the recent fires of e-two-wheelers in different cities. It is critical to make finance available for fleet funding, OEM’s and insurance companies to offer residual value guarantee and government to implement standards for battery and BMS to boost the confidence of this sector which can lead the transition of Indian automotive industry to EV’s saving the country precious forex and deliver energy security for the country.
Large-scale EV adoption requires financial incentives and innovative business models to deal with the challenges faced by EV- including higher initial capital cost and lack of a robust charging network. Even though EVs have as of now, captured about 1-2 percent of the Indian market , there is no doubt that they can be a game-changer for the automobile industry. The fact that sales of electric cars grew by 234 percent in the first half of FY 2021-22, and electric two-wheelers witnessed a growth of 504 percent in 2021 compared to 2020 should give enough confidence to the policy makers and customers of the potential of EV’s . The numbers clearly indicate that opportunities will definitely outweigh the challenges faced by the EV sector in the long run.