Blog: The Indian market for electric vehicles
- Posted by @dmin-IndiaTrading
- On September 11, 2022
- 0 Comments
- bærekraft, India, investment, Sustainability
The Indian vehicle Industry is like the western world, considering the EV-market as a sustainable solution for the future. Adaptation in Europe and US have come much further than India, and the setup will also look quite different. While we in the West mainly focus on developing the market for electric cars, it is the two- and three E-wheelers which is getting up to speed in India.
The Indian automotive industry is the fifth largest in the world and is expected to become the third largest by 2030. To take this market towards an EV- transition, it would take investments of more than 250 billion dollars to get there.
The government has a target of for EV-penetration in 2030 of:
- 70 % of commercial use of cars
- 30 % of private cars
- 40 % of busses
- 80 % of two- or three wheelers
Figure 1 show expected EV-penetration in India for 2024. The economic benefit for three-wheelers/four-wheel rickshaw is the highest as of today. Many have already changed to the electric version. Two wheelers are also moving quite fast, with opportunities of electric models is expanding rapidly.
Some of the reason for the increase in sales of electric two-wheelers is related to the change in total cost of ownership (TCO). Lately there have been an extreme increase in the price of commodities and fuels prices which has forced people to look for alternatives. In addition, the Indian government have introduced subsidies for EV-vehicles which has been very favorable for two-wheelers. Figure 2 show the historical development of TCO for two-wheelers, where the breaking point came in 2018. Indians are known to be very price-sensitive and this has led to a high growth for EV in this market.
If you consider figure 3, which show the TCO for cars, the development is lagging. A lower level of subsidies, lack of infrastructure (Two-wheelers batteries is often portable), cost of owning an EV car and less products in the market are some of the reasons why it takes longer time for it to develop.
EV-cars has however started to gain traction, and it is expected to speed up the next 1-2 years. Figure 3 also show that the TCO of EV is gaining traction, which will increase the interest from the Indian buyer.
These are some of the main points from an interesting report published by ICICI Prudential AMC. You can read more about it the attached document:
