Close to a third of all vehicles sold in India are expected to be electric by 2030, but they will mostly be two- and three-wheelers, as expensive battery-powered cars would be outside the reach of many consumers in the world’s fourth-largest automobile market.
By that time, nearly one in every 10 electric vehicles sold worldwide will be in India, and EV sales will cross 10 million units from just 400,000 last year, according to a report by Arthur D. Little released this week. Passenger cars will still make up only 5% of the battery-powered transport, authors including Barnik Chitran Maitra and Andreas Schlosser wrote in the report.
India’s adoption of electric vehicles have lagged other major markets, even though the world’s third-biggest emitter of greenhouse gases has vowed to turn net carbon zero by 2070. A sparse charging network and expensive upfront cost of clean vehicles have deterred India’s value-conscious buyers, who are used to buying cheap, no-frills gasoline cars.
In India, electric scooters, and not cars, are leading the switch to cleaner transport, but that has faced its own challenges. Several electric scooters have caught fire in recent months due to a lack of proper testing and research for the nation’s hot climate and potholed roads, further threatening the nascent adoption of EVs. Electric vehicles made up only 2% of total automobile sales in India in 2021, compared with 4% in China and 10% in UK, according to the report.
Foreign direct investment in India’s electric vehicle industry is expected to touch $20 billion by 2030, the report predicted. Investments will be boosted by transfer of technology, as well as alliances between local automakers and global electric vehicle companies, according to the report. In 2021, India’s EV industry attracted investments worth $6 billion.
Growing EV investments by established carmakers, including the nation’s biggest player, Maruti Suzuki India Ltd., combined with government subsidies, will expedite the transition in the long run, the authors said. EV adoption rate will first pick up in bigger cities as Indian automakers forge more partnerships, and startups attract more funding, they said.