The original equipment manufacturers (OEMs) of electric vehicles (EVs) need to develop market-focused affordable offerings and educate customers about the value proposition of EVs, said a study.

They should also invest in local supplier development to reduce costs and create a robust after-sales network for superior customer service, a new report from global management consulting firm Kearney said on Wednesday.

It further said that the next wave of adoption will be driven by commercial applications where cost parity can be quickly achieved, and the go-to-market strategy is well-defined for a new electric product.

And, with an adequate infrastructure and appropriate business models, electric vehicle adoption can reach 25 to 30 per cent of new sales across segments by 2030, the report titled ‘Electric mobility 2.0: tracking the next wave in India’, said.

Shared investments for R&D

Industry bodies should also encourage shared investments for research and development along with knowledge transfer among members. They should also drive the standardisation of technologies to minimise product and ecosystem development costs, it said.

“Making electric vehicle a widespread phenomenon will require focus on suitable vehicle segments and applications, potential business models, supplier landscape along with the infrastructure and ecosystem surrounding this,” said Manish Mathur, partner and head of Kearney’s Asia Pacific Automotive, Transportation and Infrastructure Practice.

The report also said that the government should increase financial incentives to boost demand and provide fiscal and non-fiscal incentives for domestic manufacturing.

“This will reduce import dependence in long run. The current state of the economy and the thrust on self-dependence can catalyse this effort,” it said.

In the next wave, vehicle segments such as buses and passenger cars in commercial applications will see a faster pace of electrification, driven by the improving total cost of ownership (TCO), environmental awareness, and a policy push, the report said.

The report also sheds light on the attributes of the right product for different applications, the corresponding TCO implications, and the ideal business model for widespread adoption.

“While the current state of the industry and the lockdown may have temporarily shifted focus away for the electrification agenda, there are still a number of challenges to be addressed. The policy landscape across States is still not aligned, TCO hasn’t reached parity for many segments, and the choice of options and acquisition cost of available options are important drivers,” said Rahul Mishra, Kearney Principal and Electric Mobility Lead.

In addition to defining the right product, thinking about where and how to sell it is equally important, he added.

Regarding infrastructure, Bhaskar Rakshit, Principal and Power and Utilities Lead, said, “With adequate infrastructure development and appropriate business models, EV adoption by 2030 would require an additional 40 to 60 billion units (kWh) by 2030, constituting two to three per cent of the expected energy demand at that time.”

Although planned generation and core transmission capacities seem adequate for future growth, last mile distribution capacity should be assessed and augmented wherever required, he said.

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