Electric three-wheelers are cheaper as compared with their ICE counterparts in terms of operational cost
NEW DELHI: By 2024, as much as 43-48 per cent of new three-wheelers (excluding e-rickshaws), and 12-17 per cent of new two-wheelers sold in India will be electric vehicles (EVs), reveals a study by CRISIL Research.
The study looked at demand, supply and policy growth drivers for EVs such as battery costs, government subsidy and charging infrastructure, besides conducting a segment-wise analysis of the cost of acquisition and operation of EVs compared with existing internal combustion engine (ICE) vehicles.
Faster adoption of two- and three-wheelers is a function of cost. Typically, electric scooters are cheaper to run compared with ICE scooters. And e-autos are cheaper as compared with their ICE counterparts.
Hetal Gandhi, Director, CRISIL Research said, “In the context, supply will also be a critical factor for adoption. The top five electric two-wheeler manufacturers are expected to increase their capacity for electric variants from 0.4 million units in fiscal 2020 to over 3 million units by fiscal 2024. And in three-wheelers, even incumbent original equipment manufacturers are launching e-autos at a rapid pace. But low-speed, four-seater e-rickshaws are fast emerging as an alternative to e-autos because of being 30 per cent cheaper.”
At the other end, sales of personal electric cars will remain in the slow lane due to high acquisition and ownership costs, in the absence of demand incentives.
“In the commercial vehicle space, subsidies to state transport undertakings will drive sales of electric buses for intra-city operations.”
Cab aggregators, though, will step on the accelerator as these will enjoy better operational economies and subsidies. A cab aggregator e-car that runs ~50,000 km a year, for instance, can save about Rs 1.65 lakh a year compared with Rs 35,000 for a personal e-car that runs ~10,000 km a year, as per the study.
In the commercial vehicle space, subsidies to state transport undertakings will drive sales of electric buses for intra-city operations.
That said, poor public charging infrastructure will impact adoption.
Pushan Sharma, Associate Director, CRISIL Research said, “The government has created a policy push for EVs with the second instalment of the Faster Adoption and Manufacturing of Electric Vehicles in India or FAME II policy and numerous efficiency and emission regulations. However, India has much catching up to do in terms of the four drivers of growth globally – battery price, demand incentives, supply push, and charging infrastructure. That means policy implementation will be crucial to faster adoption of EVs in India.”
CRISIL Research expects the landed cost of a lithium-ion battery – a key driver of EV adoption in India – to come down in line with an expected drop in global prices by fiscal 2024.
Execution of the government’s phased manufacturing programme for EV batteries, too, will help drive down battery prices. Till then, EV adoption will be gradual, giving auto component manufacturers enough time to realign their operations.