India won’t be shifting gears to electric vehicles (EVs) anytime soon.
Only 6% of automobiles sold in the country by 2030 will be electric, according to the new global EV outlook by research firm BloombergNEF.
Emerging economies such as India will adopt EVs much slower than not only China and the West, but also the rest of the world, “leading to a globally fragmented auto market,” the report says.
This contrasts sharply with the Indian government’s once-proclaimed hope for all new vehicles in the country to be electric by 2030. ”We are going to introduce electric vehicles in a very big way,” Piyush Goyal, India’s minister for power, coal, and new and renewable energy, had said in 2017. “The idea is that by 2030, not a single petrol or diesel car should be sold in the country.”
The price of a lithium-ion battery, which powers modern EVs, has been on a sharp decline. Globally, EVs across most segments will become competitive with fossil fuel-based vehicles by mid-2020s, the outlook report says.
However, the price gap won’t close so easily in India. “Fossil fuel-based vehicles in India are much cheaper than elsewhere,” said Deepesh Rathore, director at consulting firm Emerging Markets Automotive Advisors.
About 55% of all the passenger vehicles sold in the country cost less than $8,000 (Rs5.6 lakhs), said BloombergNEF’s New Delhi-based analyst Allen Tom Abraham.
“Even with the steep fall in battery prices, we do not expect highway-capable EVs with a range of 200 miles to achieve upfront cost parity with these low-priced vehicles before 2030,” Abraham added.
Fewer wheels, better luck
Two- and three-wheeler vehicles in India will be more attractive targets for electrification in the short term, the outlook report says. These also form the vast majority of EVs sold in India today.
“Four-wheelers still have a few years’ before we can figure out a business model,” said Tarun Mehta, CEO of Bengaluru-based electric two-wheeler seller Ather Energy. “For two-wheelers, that problem no longer exists,” as their long-term cost, including running cost along with upfront cost, is now competitive with conventionally-fuelled two-wheelers.
The Indian government is also incentivising passenger-owned electric two-wheelers in the second phase of its Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme. The price of Ather Energy’s flagship scooter, which qualifies under the government’s stringent criteria for incentives, has fallen by Rs5,000 to Rs1.23 lakh.
“Even though upfront cost parity (of electric two- and three-wheelers with their fossil fuel-based counterparts) is further out, the smaller battery sizes can open up opportunities for innovative business models like battery swapping and leasing, which can make these vehicles more appealing to customers in the next five to 10 years,” Abraham said.