Is India ready for the electric mobility revolution?

With India aiming to make electric vehicles (EVs) contribute at least 30 percent of private car sales in the next 8 years, the e-mobility revolution may be closer than you think. According to estimates, the global electric mobility market size is projected to surpass $718 billion and grow at a CAGR of 22 percent by 2030, according to estimates.?

India’s EV market size is expected to reach $152.21 billion by 2030, owing to the increased demand for low-emission commuting and the government's support for long-range, zero-emission vehicles through subsidies and tax rebates. According to MarketsandMarkets analysis, there is a $26 billion opportunity within the e-mobility ecosystem globally, more than half of which is contributed by various EV components, including batteries, motors, and chargers.

A policy on battery swapping businesses and special mobility zones for electric-only vehicles announced in the Union Budget 2022 could prove to be a game-changer for EVs in India. These steps will lower India’s dependence on crude oil imports and help manufacturers switch to cleaner and greener energy. As per the vision, any EV owner will be able to swap a discharged battery for a fully charged one. This earnestly addresses the space constraints in urban areas for setting up charging stations at scale.

The proposed battery swapping policy and interoperability standards will encourage the private sector to develop sustainable and innovative business models for batteries. Hence, improving efficiency in the EV ecosystem. We strongly feel that if the charging infrastructure is increased at a quick pace, EV adoption is likely to pick up more quickly in India.?

The government's four key pillars, namely inclusive development, productivity improvement, energy transition, and climate action in the Union Budget, will certainly provide a boost to economic growth. Clean and sustainable mobility is essential to reducing dependence on fossil fuels and fighting climate change. We welcome the government's initiatives in this regard and look forward to concrete action to address the roadblocks to the adoption of EVs. Special mobility zones with a zero-fossil-fuel policy will help to accelerate the transition to clean technologies and foster a more sustainable economy.

To encourage mass adoption, the government aims to bring the cost of buying and maintaining EVs on par with their petrol counterparts in another two years. In line with these objectives, the Goods and Services Tax (GST) rate was reduced from 12 percent to 5 percent on all EVs. The government also reduced GST on charging infrastructure from 18 percent to 5 percent to promote the development of charging stations.

The cost of lithium-ion batteries has also been declining, adding momentum to the electric mobility revolution in India. To a great extent, policy reforms like battery swapping and additional charging points at petrol pumps will help accelerate the phasing out of coal and switch to clean energy.?

Range anxiety and hesitancy in adoption have been some of the other deterrents to users in India, resulting in the slow penetration of battery-powered vehicles in the country. In India, there are more than 8.5 lakh EVs plying the roads. Almost 80 percent of these EVs are three-wheelers, while two-wheelers comprise less than 20 percent.?

EV sales registered a healthy growth rate last year compared to 2020, despite the pandemic. In 2021, 3.29 lakh EVs were sold in India, representing a 168 percent increase over the previous year's sales of 1.22 lakh units. These sales numbers indicate that the outlook in 2022 is expected to remain positive despite fears of COVID's third wave affecting vehicle sales.?

Today, a petrol vehicle costs around Rs 10 per kilometer on the road, while a diesel vehicle costs Rs 7 per kilometer. As these policies are implemented, and range anxieties go away, people will eventually opt for an EV that has an approximate running cost of Rs 1 per kilometre. While four-wheelers are still struggling to catch up in terms of the upfront costs and total cost of ownership, India has surely hit the inflexion point for EVs to become mainstream.

As?an?entrepreneur?and?industry?observer,?I'm?looking?forward?to?seeing?how?these disruptions?play?out.