How India is spearheading the EV revolution

Electronic Vehicles (EVs) are dubbed as the future as the near total reliance on fossil fuels for automobiles is wringing a huge cost out of the environment. The heat is being felt all across the global automotive industry.

India is quite a new entrant in this segment, and within a few years, and out of nearly nowhere, is well on its path to becoming one of the largest EV markets by 2030, with corresponding manufacturing and backward-forward linkages as well.

Till a few years ago, India was not amongst the destinations for the R&D, manufacturing, selling or export of EVs.

But the story has changed overnight. According to an independent study by CEEW Centre for Energy Finance (CEEW-CEF), the EV market in India will be a US$206 billion opportunity by 2030.

That is 206 billion US$, right!

The CEEW-CEF report says-“India’s 2030 vision of e-mobility (i.e. 70 per cent of all commercial cars, 30 percent of private cars, 40 percent of buses, and 80 percent of two-wheeler (2W) and three-wheeler (3W) sales to be electric by 2030) translates into 102 million EVs”.

Further, it says- “Under the high adoption scenario, which is 10 per cent above the vision, EVs are expected to account for 43 per cent of the total new vehicle sales. This could go down to 23 per cent in the case of a low adoption scenario, which is 40 per cent below the vision.”

It is not wishful thinking. Earlier this month Mercedes announced that it will assemble its S-class equivalent EV here in India. The company, without waiting for tax breaks, has gone ahead and announced that it’s flagship EV, the EQS will not only be sold in India, it will also benefit from lowered prices, given that it’s assembly will take place locally at the brand’s plant in Chakan, Maharashtra. The company has launched the new EQS – the S-Class’s EV-equivalent.

S-class is touted as one of the biggest shining jewels in Merc’s pack.

The India story is not all foreign investment based. The government last year launched multiple iterations of the Production Linked Incentive (PLI) scheme, to encourage the traditional carmakers to foray into the EV sector, The scheme worth Rs 26,000 crore will boost the production of electric vehicles and hydrogen fuel vehicles in the country.

This is the second PLI scheme in the sector as the government had earlier launched the scheme for Advanced Chemistry Cell (Rs 18,100 crore) and Faster Adoption of Manufacturing of Electric Vehicles (Rs 10,000 crore).

Moreover, in December, the government approved a Rs 76,000-Crore incentive scheme for semiconductors. Ever since the pandemic brought the world to a standstill, carmakers have had to delay the supply of cars due to a deficit of semiconductors.

These PLI schemes total US$3.5 billion for the EVs.

The Mercedes is closely followed by other manufacturers also. There are sufficient hints that Ford may be returning to India. Ford is included in the list of those 20 companies, which are selected by the government to receive incentives under the PLI scheme for the Indian automotive sector.

Another automobile giant BMW has already launched its MINI Cooper SE – an all-electric vehicle in the Indian market. BMW has also announced its partnership with India’s indigenous motor company TVS to develop EVs in the motorcycle segment.

For French multinational automobile manufacturer Renault, India has entered into the top 5 markets. India as a base has risen from 13th in 2018 to 5th in just three years, despite a disruption in semiconductor supplies. (The semiconductor issue is being made more secure in another set of efforts and policies.)

India is only behind two major European countries – France and Germany – and two crucial rising markets – Russia and Brazil. The French automaker is now looking to expand into electric vehicles in the future years.

So, the competition, supply chain management, and industrialization has stepped in.

To facilitate it further, and to create an efficient EV charging ecosystem, the government has liberalised the EV norms earlier this month. Under the new norms, any individual or entity can set up public charging stations (PCS) without any licensing. Bharat Petroleum Corporation Ltd. has already rolled out EV fast-charging corridors on the Chennai-Trichy-Madurai highway at ten of its fuel stations along the 900-kilometre route on both sides of the highway. BPCL is employing the services of CCS-2 DC fast-chargers, which makes the aforementioned stretch the first EV-friendly highway in the country. Moreover, the EV owners can charge their vehicles at home or offices also, from their existing connections at domestic tariffs.

By liberalising these laws, the government has opened the floodgates for more electronic startups to venture into the field and set up charging stations.

Last month, the NITI Aayog, Rocky Mountain Institute (RMI), and RMI India presented a report titled “Banking for Electric Vehicles in India”. This paper includes thoughts and recommendations to help the Reserve Bank of India (RBI).

According to this report, by 2025, banks and non-banking financial firms (NBFCs) in India might have a market size of Rs 40,000 crore (USD 5 billion) and Rs 3.7 lakh crore (USD 50 billion) for electric vehicle (EV) financing.


Tags: EVs, Fossil Fuels, India, PLI
Share with your friends