The Indian electric vehicle (EV) market is expected to see 40–45 per cent EV adoption for two-wheel vehicles and 15–20 per cent for four-wheel passenger vehicles (PVs) by 2030, according to a recent report by Bain & Company.

The consulting firm estimates that 12–13 million new two-wheeler EVs and 1 million new four-wheel PVs will be sold in India annually by 2030. As a result of this growth in EV adoption, the sector is expected to generate $76 billion–$100 billion of cumulative revenue opportunity and $8 billion–$11 billion of profit across the EV value chain. 

Passenger vehicles are expected to constitute the largest segment of this profit pool by value (despite seeing relatively lower penetration and volumes), followed closely by two-wheelers.

Revenue, profit pools

“This new EV revenue and profit pools will be significantly different from those in today’s automotive industry. Several new EV–specific segments (cell manufacturing and battery packaging, BMS, mechatronics, thermal management, telematics, charging and swapping and e-mobility) will emerge and scale. Existing automotive segments like auto OEM (new players, decrease in service revenues) and components (new EV-specific products, decline of ICE-specific components in powertrain and transmission) will also be significantly altered in the nature and composition of revenue and profit pools,” analysts at Bain & Company added. 

To make it a reality

To reach this depth of EV penetration, five key areas need to align to make it a reality. In the long term, battery price would need to fall an additional 20–30 per cent to drive price competitiveness with ICE vehicles in the absence of subsidies. OEMs will need to build a sustainable EV business model for the Indian market that balances multiple needs of product investment and ecosystem development ahead of demand.

Focus on safety

“As the industry matures, there will need to be a sustained focus on safety (through greater localisation, quality control and audits, and standardisation) to quell consumer concerns around EV battery fires. The government must continue to support EV adoption via consumer and producer incentives and regulatory support. India’s charging infrastructure will need to significantly expand to support the projected volume of EVs on the road,” the report added. 

Right early bets

While market evolution uncertainties abound, the report noted that there is scope for participants and investors who make the right early bets to accrue significant value. The EV space has already seen $3.7 billion in private equity and venture capital (PE/VC) investments in India over the past three years, and this number is estimated to increase significantly as the industry transforms.

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