Is 2024 the year when electric cars finally come to the automotive party?

Most of the big carmakers are eligible for PLI. It will help them reduce their costs. Carmakers also see India as a potential hub for electric car exports

There is a buzz in the automobile industry that electric cars could finally fly in 2024, albeit not literally. Giving substance to the hype is that a fleet of new electric cars is lined up for launch — seven, at last count — by December, with some spilling over into the first quarter of 2025.

In itself, that number is not particularly striking. Do not forget, about a dozen electric vehicles (EVs) were launched in 2023 and there are about 35 electric cars and sports utility vehicles (SUVs) already in the market.

What is fuelling the buzz is that this year EVs are expected to drive into the mass market and shake it up. The loudest roar in this is coming from the highly anticipated entry of Maruti Suzuki, the country’s largest carmaker that has so far confined its fuel experimentation to hybrids, into electric.

Giving Maruti company in this would be Tata Motors, currently the runaway leader in electric, Kia Motors, Mahindra and Mahindra, and others. Together, they are likely to make electric cars more affordable while offering consumers more choice.

Unsurprisingly, ICRA, the investment information and credit rating agency, says the penetration of electric cars could cross 4 per cent and possibly touch 6 per cent in 2024-25, a sharp jump from the 1 per cent in 2022-23, even as the overall car market expands from 3.9 million to 4.5 million.

S&P Mobility says electric light vehicle production, which is dominated by passenger vehicles but also includes light commercial vehicles, is projected to double from 112,365 in 2023 to 230,018 in 2024, a growth of 104 per cent, giving EVs a market share of 4.1 per cent, nearly double the 2.1 per cent in 2023. The industry estimates that if only passenger vehicles are extracted from the numbers, the growth could be a staggering 135 per cent, from 85,000 in 2023 to nearly 200,000 in 2024.

“The year 2024 is expected to be an inflection point, as we anticipate multiple EV launches in the Indian market,” says Gaurav Vangaal, associate director of light vehicle production forecasting, Indian subcontinent, with S&P Mobility.

Affordability drive

The affordability drive has already started, with Tata Motors last week making its two popular models, Nexon.ev and Tiago.ev, cheaper by up to Rs 1.2 lakh. This came in the wake of MG Motor cutting the prices of the Comet by up to Rs 1.4 lakh and of the Gloster by Rs 1.30 lakh.

Tata Motors said it was passing on the benefits of a reduction in battery prices to consumers to promote EV adoption.

Globally, lithium ion battery packs fell by 14 per cent in 2023, as raw materials became cheaper and new capacities went on stream, and are projected to fall further this year. The savings for a manufacturer could be as high as Rs 70,000 on a 40 KwH vehicle.

Industry experts say the price drop is more than the savings from the reduction in global battery prices, because companies want to increase volumes even if it means compromising on margins. However, a Tata Motors spokesperson says: “With battery cell prices having softened and considering the potential reduction in the foreseeable future, we have chosen to proactively pass on the resulting benefits directly to the customers. We believe that at these accessible prices the best selling Nexon.ev and Tiago.ev become even more compelling propositions to attract a larger pool of customers.”

 

2024 push

Last month, Tata Motors triggered the great electric car push of 2024, with the launch of an electric version of the Punch, priced between Rs 10 lakh and Rs 15 lakh. It is one of four electric cars the company plans to launch by March next year.

Maruti Suzuki has a two-pronged strategy for the launch of its first electric vehicle, eVX, which is an SUV.

“Our first electric car will be launched at the end of 2024. We expect to sell 80,000 to 90,000 units in 12 months. Suzuki has given us the mandate to sell the vehicle in Europe and some will be exported to Japan,” says Maruti Suzuki Chairman R C Bhargava. He adds that a plant in Gujarat, next to the ports, will help exports. Suzuki’s long-term plan is to have more than 500,000 electric vehicles rolling out of its factories by FY31.

“Multiple carmakers are either finalising their export strategies or have already committed export orders. Maruti, for instance, will begin exports from FY24,” says Vangaal.

Mahindra and Mahindra wants 20 to 30 per cent of its SUV portfolio to be electric by 2027. “We are progressing as scheduled, with the first of five vehicles coming on the road by early 2025 through the newly formed subsidiary, Mahindra Electric Automobiles Ltd,” says Rajesh Jejurikar, executive director and chief executive officer for the auto and farm sectors at M&M.

Kia Motors plans to launch the EV9 this year. Its managing director, Tae-Jin-Park, says the company will start local production of a mass segment EV in 2025 and each year add new vehicles. Its aim is to have 15 to 17 per cent of the EV market by 2030.

DVA dispute

There is also the production linked incentive (PLI) scheme for electric cars, which is set to kick in from FY25, with an incentive package of Rs 3,000 crore. Most of the big carmakers are eligible for it. PLI will help them reduce their costs. Carmakers also see India as a potential hub for electric car exports.

Tata Motors, Kia, M&M, Maruti, and PCA Automobiles have been cleared for the PLI scheme. But, to be eligible, each of their models has to get an eligibility certificate saying it has met the domestic value addition (DVA) parameter of 50 per cent.

Differences between the government and carmakers on defining the DVA has led to delays in companies claiming their incentives in FY24. Tata, for instance, has got the DVA certificate for Tiago.ev, but it is under consideration for its other models.

Undaunted, carmakers are addressing the biggest pain point for EVs. Bhargava has said that the limited charging infrastructure is impeding EV adoption. Maruti’s first EV promises to address that somewhat with a range of 550 km on one charge, thanks to a 60 KwH lithium ion battery. The eVX is expected to take its place in the market between the MG Motors ZS and Hyundai’s ­. Tata Motors offers the Punch with a 45 KwH battery option, which can go 421 km on a charge and carries an eight-year warranty.

Let the party begin.