How the EV Ecosystem Can Drive EV Adoption in India

As one of the world's largest and fastest-growing economies, India faces the challenge of balancing economic growth with environmental responsibility. To overcome this challenge, the country has set an ambitious goal of 30% Electric Vehicles (EV) by 2030.?

However, with only 1.32% EV registrations in FY 2021-22, India faces an urgent need to adopt the ecosystem approach — where all stakeholders, including policymakers, the private sector, and consumers actively collaborate — is key to achieving the EV target.?

This article analyzes the EV ecosystem in India and answers three essential questions:?

1. What is the current state of EV adoption in India, and why does it need to improve?
2. Why is driving EV adoption in India challenging, and how can an EV ecosystem help address these challenges?
3. Who are the key players in the Indian EV ecosystem, and how can they work together to electrify India??

The Current State of EV Adoption in India

India’s current EV ecosystem offers both opportunities and challenges as the nation strives to accelerate EV adoption.?

A significant portion of India’s vehicle market comprises 2- and 3-wheelers, which account for about 80% of total vehicle sales. Out of the 250 million 2- and 3-wheelers on the roads in India, only one million are electric. However, in FY 2022-23 alone, EV 2- and 3-wheeler registrations exceeded one million, with electric two-wheelers making up 62% of EVs sold.?

Projections for EV Adoption in India

India’s EV adoption is expected to grow at a compound annual growth rate of 49%, with 10 million EVs sold annually by 2030. Some states are already registering sharp increases in EV sales. In December 2022, EVs accounted for 16.8% of all vehicle sales in Delhi at an impressive 86% YoY growth.?

Government policies support EV adoption. In the 2023-24 budget, INR 35,000 crore is allocated for crucial capital investments to facilitate the transition to net-zero energy targets. Additionally, the allocation for the FAME-II scheme has been increased by 80% to encourage EV adoption.?

While EV adoption is growing, there’s a need to tap into market potential, combat environmental challenges, enhance energy security, and achieve policy objectives in order to accelerate adoption to achieve policy objectives.?

The Need to Drive EV Adoption in India?

Environmentally, EVs offer a sustainable alternative as petrol and diesel vehicles emit almost 3x more carbon dioxide than EVs. Moreover, EVs offer economic advantages like job creation and increased energy security.?

While EVs can reduce emissions and unlock economic benefits, several factors stand in the way of EV adoption in India.

3 Main Challenges to EV Adoption in India

Identifying and understanding these challenges is necessary for key players in the EV ecosystem to develop targeted strategies to address them.

1. Lack of Infrastructure

Charging infrastructure requires significant investment in equipment, land, and the power grid. Without adequate charging infrastructure, consumer demand for electric vehicles will remain severely limited.?

2. High Costs of EVs?

The price of an EV is much higher compared to an internal combustion engine (ICE) vehicle because of the high cost of the battery. The lithium-ion batteries use costly components made up of rare earth metals. Research and development also contribute to high EV costs through investments like software to make EVs more efficient and autonomous.?

3. Low Public Awareness

Due to limited outreach and the dominance of traditional vehicles, many people in India are unaware of the benefits of EVs and available government incentives.

The Ecosystem Strategy to Increase EV Adoption in India

The ecosystem approach can address the challenges faced in driving EV adoption by fostering collaboration between key players.?

1. Infrastructure Development

To improve government initiatives like the FAME II scheme, policymakers should involve all EV ecosystem participants in creating a roadmap for India’s EV infrastructure and prioritize innovation, cross-operator synergies, long-term solutions, and comprehensive planning.

2. Improving EV Affordability

To reduce the high costs of EVs, policymakers can design corporate incentives and consumer subsidies to push local supply and demand of EVs, respectively. In the long term, greater self-reliance in local production and reduced dependence on imports such as battery components, is key to achieving price reduction.?

3. Awareness Campaigns

Increased awareness about the benefits of EVs creates a favorable environment for the widespread adoption of EVs across the ecosystem. The government should offer incentives and tax breaks to companies that promote EVs. Integrated campaigns to promote EVs, such as the ‘Go Electric’ campaign, should also be encouraged.?

Addressing these aspects allow for a sustainable and widespread transition to e-mobility, fostering a greener transportation landscape in India.

7 Major Players of the EV Ecosystem in India

Collaboration among the players can make the EV transition more affordable, cohesive, efficient, and effective.

1. EV Manufacturers

Competing new and established brands can expand EVs’ availability and affordability. The Indian consumer now has greater access to 3-wheelers, cars, buses, and other EV models.?

2. Component and Battery Manufacturers

Component manufacturers can invest in technology development and local production, helping India emerge as a leader in the global EV market. Specifically, batteries are responsible for the EV’s hefty price tag.?

3. Charging Infrastructure Providers

With charging stations across the country, infrastructure providers can address range anxiety of EV consumers. Companies can bring together different providers’ charging points into a single platform through interconnected charging networks.?

4. The Government

The Indian government’s policy support through subsidies and end-user incentives encourages players to invest in the EV ecosystem and accelerate consumer EV adoption.

5. Investors and Financiers

Investors provide the necessary capital for the manufacturing, supply, assembly, sales, and servicing of EVs and EV components. Consumer financing options from major banks and NBFCs make EVs more affordable and accessible to a wide range of consumers.?

6. Consumers

With educational resources available, EV consumers can participate actively in the public discourse and voice their demands. With greater knowledge about EV benefits, consumers can adopt EVs and encourage their peers to do so.

7. Other Players

Many other players are involved in the EV ecosystem, including software companies that provide EV operating systems, charging platforms, and fleet management services.?

EV adoption requires an interconnected ecosystem. A siloed approach to problem-solving in the EV industry will slow down the transition to EVs.?

An EV Ecosystem That Fulfills All Players’ Needs

An EV ecosystem presents a unique opportunity to drive the EV revolution in India. This approach can address the many challenges faced by EV adoption by fostering collaboration between key players while boosting the economy and establishing a sustainable future.

Policymakers and industry leaders can effectively bring together all stakeholders, from consumers to manufacturers, to drive the EV revolution in India through a collaborative approach. The transition to EVs will be faster and seamless when the needs of EV players are met efficiently.