Led by electric two-wheelers, overall electric vehicles (EVs) in India will see a triple-digit growth for FY22 as compared to FY21. Although in FY21, EVs witnessed growth in sales supported by two- and three-wheelers, the share of EVs in the overall vehicle sales was less than 1 per cent. But, there has been a strong revival in sales of EVs this fiscal.

The sales have already increased by about 50 per cent during YTD FY22 (April-November) albeit on a low base. Backed by continued momentum in two-wheelers and demand revival in three-wheelers due to the expectation of better economic prospects, the total EV volumes are expected to have a triple-digit growth in FY22, says a report of Brickwork (BW) Ratings.

The share of two-wheeler EVs may grow faster than that of three-wheeler EVs and help achieve the target of 30 per cent EV penetration by 2030 on account of the requirement of smaller batteries, huge untapped potential in India and economic viability. The success of three-wheeler EVs hinges upon the launch of a wide range of EV models of petrol and diesel versions at affordable prices.

EVs more economical in the long run

Currently, an EV costs more than normal vehicles do, although, in the long run, the maintenance costs of EVs is lesser than petrol-operated vehicles. As per BW Ratings’ estimates, purchasing an EV would be more economical in the long run as savings derived by using an EV is 40-50 per cent of the cost of Internal Combustion Engine (ICE) vehicles over a five-year usage period. Declining battery prices would further result in prices of EVs coming down in the near future.

Additionally, the availability of charging infrastructure is a major factor that needs to be worked on. The government plans to set up 4,00,000 charging stations in the country by FY26 from the current levels of little over 1,800, of which only 370 are functional in major cities. Moreover, the fact that only 13 States in India have an EV policy to nurture EV sales often acts as a deterrent for potential EV buyers.

The target of achieving 30 per cent EV penetration by 2030 will require more concerted efforts by OEMs and the government and significant investments in the EV value chain. As per the BW study, OEMs will have to incur capex to the tune of about ₹3.5-lakh crore, exclusively for EVs, in the next five to seven years to meet the government’s vision of EVs’ share by 2030.

This amount is significant as OEMs currently have a capex of around ₹25,000-30,000 crore per year in terms of enhancing their capacity for model launches and the upgradation of existing models. Hence, apart from their regular capex, OEMs will have to incur additional capex to the tune of ₹30,000 crore per year on EVs’ capacity expansion, which seems unlikely, looking at the current challenging business environment.

But with increased concerns of global warming and a rampant increase in fuel prices, the constant initiative needs to be taken to create demand and improve the supply chain and infrastructure for EVs to operate and to achieve the ambitious 2030 target, it said.