EV penetration. India’s transition to electric mobility will be faster, say experts

India’s transition to electric mobility will be faster as automobile companies are making big-ticket investments in the development of infrastructure to facilitate electric vehicle penetration in the country, according to industry experts.

The Union Government has a target of 30 per cent electric vehicle (EV) penetration in private cars, 70 per cent for commercial vehicles, and 80 per cent for two and three-wheelers by 2030 for the automobile industry.

“The transition to EVs in the two and three-wheeler segment will be much faster than anticipated. Battery swapping policy would also provide some fillip to the E3-wheeler segment. The small commercial vehicle segment is also showing some good promise along with buses in the commercial segment,” said Hemal Thakkar, Director, CRISIL Market Intelligence and Analytics.

Automobile companies have been announcing investments in the EV segment, with the latest one being by Mahindra & Mahindra, which plans an investment of ₹10,000 crore over the next 7 to 8 years to set up a manufacturing plant for EVs in Pune.

“Passenger vehicles are also seeing investments that are pushing electrification faster than anticipated,” added Thakkar.

According to Vahan, which tracks vehicle registrations, 9,49,547 electric vehicles were registered in 2022 in India.

“In India, EV share in total new cars sold breached the 3 per cent mark for the first time, and 2023 could be the year it crosses the golden 5 per cent number. The current size of the electric light commercial vehicles stands at 350,000- 400,000 units in the domestic market, and is expected to grow at 7-10 per cent till 2025,” said Inderveer Singh, Founder & CEO, EVage

Statistics as per CRISIL

Increased localization

Localization of components for manufacturing EVs in the country will help regulate the price of vehicles and increase penetration.

“The local vendor ecosystem is largely absent, and there is a high dependency on imports. We have started seeing auto ancillaries start work on component segments that will find applications in EVs. While our dependency on imported battery cells will continue in the medium term, other components like motors and controllers will be largely localized. In the next two-three years, we expect that there will be a noteworthy local vendor ecosystem for EVs, which could drive cost economies as well,” said Vinutaa S, Vice President & Sector Head - Corporate Ratings,ICRA Limited.

Charging infrastructure challenge

Despite the push by the Union Government and developing infrastructure, concerns regarding charging electric vehicles remain.

“The Government of India has proactively amended guidelines for charging infrastructure development in the country to ensure significant improvement in charging infra and access to the same in the next 3-5 years. Battery-swapping is also an alternative solution for EV charging infrastructure, especially for commercial applications,” added Vinutaa

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