In fiscal year 2023, India's EV industry experienced a remarkable surge, with sales leaping to about 1.17 million units – a 154 percent year-on-year increase. The rapid growth in the high-speed electric two-wheeler sector, led by OLA, Hero Electric, and TVS Motors, and robust demand for high-speed electric three-wheelers, particularly for last-mile deliveries and e-commerce, have been major contributors to this trend.
In a conversation with DIGITIMES Asia, Sidhant Rastogi, the Managing Partner at Zinnov, underscored that the key catalyst for this burgeoning growth is the favorable policy environment and generous incentive schemes put forth by both central and state governments. Key initiatives like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) II scheme, the Production-Linked Incentive (PLI) scheme, the Scrappage Policy, and state-level subsidies have all played pivotal roles in invigorating the industry.
"Looking ahead, we anticipate that further policy measures will provide a strong impetus for EV growth," Rastogi said. "Focus areas include grid connectivity for charging stations, affordable tariffs, and battery swapping. Moreover, the establishment of special e-mobility zones, dedicated exclusively to EV operations, will play a pivotal role in accelerating this growth trajectory."
Factors contributing to the growth
A blend of crucial factors is spurring the swift uptake of electric vehicles (EVs) in India. The rise in fuel costs, along with lower operational expenses of EVs, are resonating with cost-aware consumers. Furthermore, EVs have hit a milestone by achieving Total Cost of Ownership (TCO) parity with traditional Internal Combustion Engine (ICE) vehicles, providing a significant boost to EV sales and advancing the industry.
"The high-speed two-wheeler and three-wheeler segments have witnessed significant growth in EV adoption," Rastogi said. "Established original equipment manufacturers (OEMs) have played a crucial role by offering a diverse range of affordable products that feature attractive designs and impressive performance. These OEMs are actively investing in brand-building initiatives to establish stronger connections with customers. Moreover, their aggressive distribution strategies have contributed to the overall growth of the EV market."
Advancements in battery technology and local manufacturing have reduced battery costs, making electric vehicles more affordable. Combined with government subsidies and incentives, EVs have become accessible to a broader consumer base, appealing to various market segments.
Charging infra and supply chain
The Indian government has laid out an audacious objective to electrify 30 percent of all vehicles on India's roads by the end of the decade. To realize this ambition, no avenue is being overlooked. A crucial element of their strategy is to stimulate investments in domestic manufacturing from key players within the ecosystem, thereby fostering a resilient and efficient supply chain for electric vehicles.
"A key emerging trend is the push toward standardization of charging pins across OEMs," Rastogi added. "Ather, a leading EV manufacturer, has already opened patents for its proprietary fast charger to achieve this goal. Currently, India has only 1,800 charging stations servicing 16,200 EVs, which is much lower than the global average. A common charging pin would enable EV consumers to leverage charging grid networks across players, making it more accessible and convenient for them."
Addressing 'range anxiety' among EV users, OEMs are focusing on battery swapping, a move supported by the Indian government's ongoing development of a battery-swapping policy. This promising trend, although in its infancy, has potential.
Moreover, the government is encouraging on-site renewables for charging stations, as seen in Delhi's residential EV infrastructure and Nagpur's solar-powered bus depot stations, showcasing its commitment to sustainable mobility.
Response from India ICE giants
India's auto sector is shifting from Internal Combustion Engines (ICE) to Electric Vehicles (EVs). OEMs are implementing strong EV strategies, with veterans like Hero Electric, OLA, and Ather leading the two-wheeler market, while newcomers like Kick-EV and Revolt join the growing sector.
"Bajaj Auto is making waves by investing in a stake in Yulu, a mobility renting platform, to manufacture EV two-wheelers for the platform," Rastogi said. "They have recently announced their entry into the retail space for personal mobility. Mahindra & Mahindra is also stepping up its EV game by partnering with Charge+Zone to set up a network of charging stations for Mahindra's range of electric vehicles, providing owners with access to more than 2,500 charging points across 25 cities and 10,000 km of highways."
Hero MotorCorp's investment in Zero Motorcycles and Ather Energy's deal with Karnataka's ESCOMs to establish fast-charging stations also highlight the industry's growth. Meanwhile, Maruti is joining the EV movement, planning to launch its first electric SUV by 2025.
What to expect now
India is on the cusp of an electrification revolution set to change mobility and lifestyle. The order of electrification will start with three-wheelers, followed by two-wheeler fleets, retail two-wheelers, buses, four-wheeler fleets, and finally, retail four-wheelers.
"Two-wheelers and three-wheelers are particularly attractive with their low total cost of ownership (TCO), and we expect up to 15% of two-wheelers to be electrified in the next few years," Rastogi said. "Four-wheeler adoption is likely to be led by fleets, with passenger cars reaching 5% penetration in the EV space in a best-case scenario."
Yet, the path to widespread EV adoption presents challenges. Insufficient charging infrastructure, raw material shortages, skilled manpower scarcity, inconsistent subsidies and incentives, and limited interest from traditional ICE players hinder progress.
Rastogi stressed the need for a robust mining policy to meet future EV demand and ensure sustainable raw material supply in India. He also emphasized the importance of investing in skilled workforce for battery, power electronics, and software manufacturing. Lastly, he highlighted the necessity of central monitoring of incentives and additional financial support for prospective EV buyers, beyond the current FAME scheme.
Sidhant Rastogi, Managing Partner, Zinnov. Credit: Zinnov.
