The global electric vehicle (EV) industry has been making strides over the last decade, led by China, followed by other major automobile markets. India considerably lags in terms of EV penetration compared to other APAC markets. There is still a lot of work regarding the availability of several models, charging Infrastructure, financial incentives, vendor ecosystem development. The country has a trivial share in EVs, even though we are globally the largest 2W and 3W market.
The year 2021 marked a significant milestone for Electric Vehicles (EVs). The central government increased the incentive for Faster Adoption and Manufacturing of (Hybrid & Electric Vehicles) (FAME) subsidy from ₹10,000 per kWh to ₹15,000 per kWh, drastically lowering the price of most automobiles by ₹10,000-20,000 and making them cost-effective. In addition, different state governments provided incentives for EV purchases and road tax and registration fee rebates, making on-road prices of EVs comparable to petrol vehicles in most circumstances.
Furthermore, the average consumer’s mindset has been that petrol costs will keep rising. Customers’ dissatisfaction has led them to seek alternative solutions. The combination of EVs receiving significant attention due to government laws, the entry of new players, and increased awareness among consumers have led to the rise in demand for EVs.
“To promote a shift to the use of public transport in urban areas, special mobility zones with zero fossil fuel policy to be introduced. Considering space constraints in urban areas, a ‘Battery Swapping Policy’ will be brought in,” said the Finance Minister while presenting this year’s Budget.
The finance ministry announced the plan to implement a battery swapping policy and ways to formalize interoperability standards. Battery swapping policy would be hit for electric 2W and 3W and will help faster and more effective percolation of the technology to the grassroots levels. This move would also help battery manufacturers bring down the cost of the batteries through economy of scale. There are plans on motions to create special mobility zones for electric vehicles and bring electric fleets to public transport systems. This would help the public adopt the EV and allocations under the FAME II scheme. Including the energy storage systems in the harmonized list of Infrastructure will enable cheaper financing options and easier credit availability. The introduction of a battery swapping policy and interoperability standards will be a big booster for the startups in the EV space.
The future of the electric two and three-wheeler segment, followed by the electric bus segment, looks very bright. It can partially be because of the favorable total cost of ownership (TCO) and huge volumes, translating into economies of scale benefits. EVs have been slowly gaining acceptance (0.93 million EVs have been registered in India since FY2012), mainly e-3Ws and e-2Ws.