Low penetration of electric cars in India? Hybrids may be the answer

EV penetration in both passenger cars and two-wheelers needs a boost if India wants to meet its aggressive green targets. Pure electric cars accounted for nearly 1 per cent (33,000) of 3.3 million car registrations in 2022. If hybrid electric cars sold last year (19,556) are included, the combined share of the two (e-cars and hybrid electric cars) would go up by only 0.5 percentage points in total car sales. 

Unlike many countries in Europe and some key markets like Japan and South Korea, India does not have a vibrant hybrid (petrol and electric) car market in its quest to make a direct transition from ICE to electric. 

Consider this: The share of battery electric vehicle (BEV) registrations in Europe (10 major countries) stood at 15.4 per cent (1.41 million) of overall passenger car registrations in 2022, according to PWC data. On the other hand, the share of hybrid electric cars stood at 23.9 per cent (2.18 million units). In countries such as the UK, France, Italy, and Spain, the gap was even between hybrid cars and pure electric cars.

A similar scenario prevailed in Japan where BEVs in passenger cars at 31,000 units accounted for a mere 1.4 per cent of total car registrations last year, while HEVs accounted for 49 per cent (over 1 million vehicles) of the pie. Even in South Korea, sales of hybrid cars outdid electric in 2022; the country registered 259,000 hybrid cars compared to 155,000 BEVs.

In India, it’s the hybrid market that Maruti Suzuki is understandably targeting. Chairman R C Bhargava has repeatedly said alternative technologies (such as hybrid electric and CNG), besides pure electric, should be incentivised, so that consumers have a green alternative to costly electric cars.

He pointed out that hybrids would be an ideal solution for smaller cars costing Rs 7 lakh — which is a large market. But the government has a direct transition from ICE vehicles to electric.

That is more like China where the penetration of electric cars hit a high of nearly 20 per cent (5.5 million) of total registration in 2022. Hybrid electric car registrations were only 0.8 million (3.1 per cent). In the US, the race is tighter; in 2022, 725,000 electric cars were registered accounting for 5.3 per cent of overall sales, the share of hybrid cars was bigger at 6 per cent, with 815,000 units. 

In the two-wheeler sweepstakes (scooter and mobikes), electric scooter penetration in India already went beyond 4 per cent, with 0.6 million units sold in 2022. Overall, two-wheeler sales stood at 14.5 million last year. If e-rickshaws are included, the penetration of EVs in the two-wheeler and three-wheeler space goes up to 6-7 per cent.

But the big two-wheeler markets in the world clearly have done much better. Data by IEA and International Council for Clean Transportation shows both China and Vietnam have a higher penetration of electric two-wheelers and three-wheelers; as of 2021, their penetration stood at over 10 per cent in Vietnam and nearly 50 per cent in China.

According to many electric two-wheeler companies, with the inflection point reached, the graph of EV transition would be sharp – the consensus is that e-scooters themselves would hit a penetration of 10 per cent by the end of 2023. And if Ola Electric CEO is to be believed, the segment’s sales would be 100 per cent electric by 2025.