EV industry hopeful of prospects despite coronavirus pandemic

Even as the coronavirus pandemic rages across India, leading to lockdowns and closure of businesses, sales of electric vehicles (EVs) will not see a degrowth this financial year owing to the low base of last year, low penetration, the expected growth in consumer confidence, as well as falling prices. This is while the internal combustion engine (ICE) vehicles are bracing themselves for the steepest decline in sales in recent times.

EVs registered a 20 per cent year-on-year increase in sales in FY20 (e-rickshaws excluded), with the surge driven largely by two-wheelers, according to the Society of Manufacturers of Electric Vehicles (SMEV). Meanwhile, in ICE vehicles, the overall volumes of the industry fell by 18 per cent year-on-year in FY20.

During this financial year, automotive companies would be faced with no sales or dampened sales for around six months owing to the curtailment of all non-essential businesses in the wake of the pandemic, said Sohinder Gill, Director General, SMEV. ICE vehicles are expected to witness a degrowth of 30-40 per cent year-on-year, he added.

“But, in EVs, particularly in cars and two-wheelers, I strongly believe, there will not be any degrowth. So, even with whatever is left out of the six months or so this financial year (assuming operations get back to full swing by August or thereabouts), volumes will be at least the same as last year. So, FY21 may be the same or a little higher than FY20 (in terms of volumes sold) in spite of losing half a year,” said Gill. If not for the pandemic, the EV category would have registered double the sales, he added.

“Given that battery prices are expected to fall in the medium term, and due to lower penetration of EVs, we expect e-two wheelers to perform better than their ICE counterparts,” affirmed Hetal Gandhi – Director, CRISIL Research. This is even as pressure on funding for start-ups ― which forms a large chunk of the electric two-wheeler ecosystem ― is anticipated due to the pandemic, she said. The traction in electric two-wheelers could also be slower if crude prices remain suppressed and taxes on petrol are reduced, Gandhi added.

Gill also drew attention to how the 1,400 dealers of electric two-wheeler companies are currently shut, with some of them likely to get permanently shut. “But, the confidence in the category has started growing. So, from that point of view, if we operate for another six or seven months ― from maybe August or July ― I think, easily the category will be able to clock as much as it did for the whole of last year,” he said.

Citing a survey conducted by SMEV, he said that over 35 per cent of the sales of electric two-wheelers came on the back of referrals. Currently, there are very few electric two-wheelers plying on the roads, he said, but as this starts picking up, consumer confidence will get bolstered.

Even in electric cars, which posted a marginal y-o-y sales decline of 5.5 per cent to 3,400 cars compared with FY19, with many car makers like Tata Motors, Hyundai and MG Motor rolling out their EV products towards the latter part of last year, Gill said they will do “much better than last year because the base level is so low”.

“Going forward, we believe that with more people looking at conserving the environment post the ongoing pandemic, we expect to see sturdy demand for vehicles in this category,” said Rajeev Chaba, President & Managing Director - MG Motor India.

Chaba pointed out that MG Motor has received over 3,000 bookings for the ZS EV, a number which surpasses the total number of all electric cars sold in India in 2019.

He said that MG Motor India continues to receive “brisk demand” for the ZS EV, which he attributed to the ecosystem it developed around the car.

Personal mobility vs public transport

Once the coronavirus pandemic blows over, the EV category is expected to grow because people would want to opt for personal mobility rather than public transport within the city, which is also due to the cost benefit and ease of driving it offers, said Jeetender Sharma, Founder and Managing Director of Gurgaon-based electric two-wheeler company Okinawa Autotech Private Limited.

“This lockdown will not be a setback for us. I feel that after this lockdown, people’s attitude will incline towards electric vehicles. After this pandemic gets over, industry players will look for alternatives other than China, for imports, as most of the players used to import CKD and SKD units. This scenario might lead to increase in local manufacturing and start-ups,” said Sharma.

“Once the lockdown is lifted, we will move to the implementation phase (of the current efforts) and believe that the business will pick up forthwith,” said Pankaj Tiwari, India Business Development Head - Nexzu Mobility, an electric mobility company founded in 2015.

When asked if the reduced disposable incomes and dampened sentiments post the lockdown would come in the way of people opting for a new category like EVs, Gill said, “Certainty, trends are going to change and affordable segment products will really sell very much because of social distancing and the fear of going into public transport.” Gill explained that a cost-benefit analysis of using buses and metros vis-a-vis electric two-wheelers shows that the latter would be a cheaper option in the long term.

Gill also talked about the reduced air pollution levels perceptible in cities currently, which he attributed largely to the sudden absence of polluting ICE vehicles.

To be sure, across the globe, lockdowns have taken countries off guard by showing what their cities look like and how the air quality can be better, if not for fuel-guzzling vehicles.

“If you want to maintain our cities, if you want to maintain a healthy lifestyle, if you want to do something for our society, individual customers, society, industry and government have to think alike… this is a time to change, time to go electric, time to become zero polluting and save over lives and save the country,” said Gill.

The city of Milan in Italy, one of the worst affected by the virus outbreak, has already reportedly laid out plans to turn around 35 km of its streets into new cycle paths, with the city’s councillor for mobility and public works saying in a statement that it won’t be able to have crowded subways and buses going forward. “And then, to avoid having another million cars in the streets, we will have to boost the two wheels: more bicycles and more electric scooters,” Marco Granelli, the councillor, said.

Gill said that SMEV is already in talks with the government to work on awareness campaigns, such as the inclusion of EVs in the Swachh Bharat campaign, as well as efforts to draw attention to how over 14 of the most polluting cities in the world are in India, to encourage the adoption of EVs by the masses.

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