EVs present an opportunity of almost Rs 3 trn for stakeholders: CRISIL

The opportunity includes potential revenue of Rs 1.5 trn across vehicle segments for vehicle makers, component manufacturers and Rs 90,000 crore in form of disbursements for vehicle financiers.

Electric vehicles (EVs) present an opportunity of almost Rs 3 trillion for various stakeholders in India over the next 5 years through fiscal 2026, a CRISIL analysis indicates.

The opportunity includes potential revenue of about Rs 1.5 trillion across vehicle segments for vehicle makers as well as component manufacturers and Rs 90,000 crore in the form of disbursements for vehicle financiers, with shared mobility and insurance accounting for the balance.

Meanwhile, reflecting the shifting from ICE to battery operated vehicles, data on the Vahan portal shows the share of electric three-wheelers (3Ws) increased to almost 5 per cent of three wheelers registered in fiscal 2022 from less than 1 per cent in fiscal 2018.

For electric two-wheelers (2Ws) and buses, the percentages rose to almost 2 per cent and 4 per cent, respectively. The shift is not limited to large cities either. Smaller towns are also entering the fray, driven by the government’s fiscal and non-fiscal measures.

According to Vahan statistics, the contribution of the top 10 districts in nationwide sales of electric cars and 3Ws dropped from 55-60 per cent in fiscal 2021 to 25-30 per cent in fiscal 2022.

For two wheelers, the percentage declined from 40-45 per cent to 15-20 per cent. The drivers of EV adoption are for all too evident. Rising fuel prices and higher cost of ICE vehicles are impacting their affordability, and government support for EVs is also playing a huge role.

Crisil expects adoption of 2Ws and 3Ws to rise by 2026 even without subsidies, due to parity of ownership cost with ICE vehicles.

“Considering the improving cost parity and the government’s focus on electrification of vehicles, we should not be surprised if EV penetration reaches 15 per cent in two wheelers, 25-30 per cent in three wheelers  and 5 per cent in cars and buses by fiscal 2026 in terms of vehicle sales,”  said Hemal Thakkar, director, CRISIL.

Several new trends and business models are expected to emerge as all that growth materialises. Battery-as-a-service and public charging stations, for one, typically have a pay-per-use model and aim to reduce the initial outgo of the customer, improve viability, address range anxiety and, in turn, increase asset utilisation. Mobility-as-a-service is yet another. It focuses on shared mobility by linking operations with charging infrastructure. Here, too, the vehicle and charging infrastructure are deployed on a pay-per-use model. Then there is micro-mobility, which provides last-mile distribution of cargo by way of micro-rental of electric 2Ws and 3Ws, operating on a self-drive rental model. The model is typically asset-light and based on open-source operations, where the user can hire and deploy vehicles.

“The emergence of EVs is an opportunity for both existing and new industry participants to innovate and capitalize on the quickly evolving passenger and cargo mobility,” said Jagannarayan Padmanabhan, director, CRISIL.