“Next year for sure” replied Elon Musk in early October, when a Twitter user asked him about Tesla’s entry into India. Those four words were enough to cause frenzy on social media. While headlines did the rounds and Tesla fanboys rejoiced, existing electric vehicles in India languished silently in parking lots amid the blare.
According to a KPMG-CII report Shifting gears: the evolving electric vehicle landscape in India, EVs represent less than 1% of the total automobile market in the country. In FY20, only 3,400 units of passenger vehicles and 600 units of commercial vehicles were sold in this segment. The constraint in success, as per the report, is due to limited number of products, insufficient battery promise, low performance and high prices.
However, the numbers in the two-wheeler and three-wheeler market look promising. In FY20, a total of 152,000 units of 2Ws and 90,000 units of 3Ws were sold in the EV segment. This is on the back of “their economic viability, both in terms of price and fuel economy”. As the pace of adoption grows in light electric mobility, it will likely drive the growth story in other markets, mentions the report.
The growth story also needs to be supported by a robust battery industry and charging infrastructure. India is reported to have only 933 charging stations as of June 2020. And, lithium ion battery cell production hubs are primarily located in the US, China, Japan, South Korea and Western Europe. While Indian companies have outlined plans to set up manufacturing facilities, the country is still dependent for raw materials such as lithium and cobalt.
For now, the government also seems to be pushing for widespread EV adoption. With a total outlay of Rs.100 billion spread over FY20-22, the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme provides demand incentives for electric vehicles. If things go right and B2B opportunities also open up, India is looking at 35% EV penetration in 2W market and 75% in 3W market by 2030.
According to an independent study released by the Council on Energy, Environment and Water (CEEW), India can save $14 billion in crude oil imports annually if EVs garner 30% share of the country’s new vehicle sales by 2030. But, going from less than 1% to 30% is no mean task. For those who abide by Musk’s words, his 2018 tweet about India’s “challenging government regulations” should be indication enough that the segment is not going to zoom ahead anytime soon.