‘Electric vehicles’ is the buzzword in the automotive market. Although India’s EV transition is in the fledgling phase, there has been a lot of action in the past few months, indicating accelerated momentum in EV adoption in the country.

The next two-wheeler to be bought by a customer will probably be an electric product, but the next car to be bought may not. Because the two-wheeler industry crossed the inflection for EV adoption in 2021, while it is at least three years away from the inflection point for the passenger vehicle segment, says a report by BNP Paribas.

“We see FY22 as the year of accelerated EV adoption in the two-wheeler segment, helped by incentives, wider availability, model launches, a rise in crude prices, and improved general awareness,” said the report.

Presently, the electric two-wheeler (e2W) market is driven by new entrants and Okinawa Autotech has close to 20 per cent of the volume market share. Top 10 companies account for more than 93 per cent of volumes. Maharashtra tops the States in e2W sales with a volume share of nearly 18 per cent, primarily driven by incentives, followed by Karnataka.

In FY22, EV penetration in the two-wheeler segment was 1.9 per cent with a volume of 2.65 lakh units. But in this fiscal, the total e2W volumes are expected to touch 6.56 lakh units and the penetration will cross 4 per cent, said the report.

Miles to go

Though the passenger car market has seen some increased activity on the EV front, the inflection point is some time away, revealed BNP Paribas’ survey. The average price of passenger vehicles sold in India is significantly below that of other major global auto markets. This means it would take much longer to achieve price parity between ICE and EV models in India than in developed markets.

Also, incentives on electric PVs in India are lower than those offered in auto markets that saw a significant shift to EVs. “We see multiple model launches by market leaders and a significant reduction in battery costs as key catalysts to drive the adoption of electric PV. We believe this could take at least three years,” it said.

Though EV penetration in the PV segment has increased over the years, it still stays below 1 per cent. Presently, the electric PV market is dominated by one company — Tata Motors, holding more than 80 per cent share — and one State (Maharashtra).

In FY22, electric PV market penetration was estimated at 0.5 per cent with a total volume of 15,873 units. For the current fiscal, volumes are expected to increase to about 28,000 units with penetration inching towards 0.8 per cent.

As of now, the two and three-wheeler segments have taken a clear lead in EV adoption in India with multiple model launches, distribution network expansion, and strong thrust from start-ups. Over the last few months, there has been increased activity, including investment announcements by OEMs (both start-ups and incumbents), brownfield and greenfield capacity expansion, partnerships and policy announcements by the government.