The share of passenger vehicles in India’s fledgling EV market will be a mere 5 per cent by 2030 though 30 per cent of all vehicles sold will be electric by then, according to a study released Thursday.
The EV sector could attract foreign investments of about $20 billion by the turn of the decade, said the study by Arthur D. Little (ADL) and called 'Unlocking India's electric mobility potential'.
The sector, which is largely being driven by two wheelers, is likely to cross sales of 10 million vehicles by 2030, with an overall adoption rate of more than 30 per cent across different vehicle categories. EV adoption for passenger vehicles is likely to be a mere 10 percent by the end of the period, amounting to a strikingly small 5 percent of total EV sales, it said.
India is 11th among 15 countries ranked in terms of market readiness for EV adoption, according to ADL’s Global Electric Mobility Readiness Index called GEMRIX. Norway is world’s EV adoption leader.
Indian EV sales increased threefold to a total of 4,29,217 units in FY22: compared to 1,34,821 units from the year-ago period, according to the Federation of Automobile Dealer Association (FADA). Of this, the share of e-cars was only 17,802 units.
India’s EV growth will be slow, limited by higher upfront costs, lack of models, and dearth of infrastructure like charging stations and battery-swapping centres, said the report.
India, despite obstacles, is one of the largest markets for EVs in Asia--behind only China and ahead of Japan, said Barnik Chitran Maitra, managing partner and CEO, India & South Asia, Arthur D. Little.
“We can build on this position by acting to support product innovation, create reliable charging infrastructure, and provide subsidies to buyers and additional incentives to startups involved in battery R&D, among others,” he said.
The study recommended that the private sector and the government work together to remove said barriers. To attain more than 30 percent EV adoption, India will require approximately 800 GWh of batteries by 2030.
India is accelerating plans to manufacture Li-ion cells within the country, anticipating $2.3 billion in government subsidies and more than $7.5 billion in investment potential.
In the recent past, government support and investments made by auto-incumbents in the EV ecosystem have also bolstered private equity (PE) and venture capitalists (VC) confidence in India’s EV space.
If India achieves its true EV potential of 50 percent electrification, every 10th EV sold globally could be manufactured in India, making India a global EV powerhouse, said the study.
“India is well-positioned to make this transition. The solutions are evident, and the environment is conducive. With the needed impetus, India can achieve its aspiration of becoming one of the world’s leaders in e-mobility," said Fabian Sempf, Principal & India Head of Automotive, India, Arthur D. Little.