India's oil hunger to double despite its electric car ambitions

Even though India aspires to sell only electric vehicles by 2030, it still sees gasoline and diesel consumption doubling over that period. The two ideas may not be contradictory.

Electric vehicles will take time to become affordable enough for price-sensitive Indian masses, according to the country’s energy forecaster. During that time, gasoline and diesel vehicles will remain the mainstay as cars and scooters sold in the next few years will stay roadworthy for at least a decade after.

“The government is only aiming for 100 percent electric vehicles sales by 2030,” Suresh Sivanandam, the Singapore-based head of Asia refining research at Wood Mackenzie Ltd., said in an email. “We should still see gasoline demand growing until 2030 but the pace of the growth slows down beyond 2030.”

The Petroleum Planning and Analysis Cell of the country’s oil ministry estimates that both gasoline and diesel consumption in the fastest growing oil consumer will double by 2030. Wood Mackenzie too believes that gasoline demand will double by 2030, while diesel may only grow by a third to 113 million tons by 2030.

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In addition, while the electric vehicle goal has been spoken of by various ministers in Prime Minister Narendra Modi’s government, it hasn’t been formulated into an official policy yet.

“The government is yet to release a policy paper on electric vehicles,” Sivanandam said. “That would set the tone for how serious the government is about this ambition.”

In the meantime, growing income levels are spurring more Indians to buy traditional cars and scooters. India sold more than 17.5 million scooters and motorcycles in the year ended March 31 and annual sales have grown about seven percent in three of the last four years. Car sales grew more than seven percent in the last two years.

The International Energy Agency, which last May termed India’s EV plan “ambitious,” sees the country as the center of global oil demand until 2030.