Issue 21

The State of Electric Vehicles in India

Abhiir Bhalla

With the government actively promoting the use of Electric Vehicles in India, what is the future of electrical transportation in India looking like?

Much like NFTs, cryptocurrencies and artificial intelligence, electric vehicles are increasingly becoming a buzzword not just around the world, but in India as well. Recent years have seen a surge in the popularity of the automobile industry’s electric vehicle segment. Following Union Minister Nitin Gadkari’s recent announcements regarding the expected sale of electric vehicles (EVs) jumping 10 times within the year and his commitment that “the cost of EVs will come down to a level that will be at par with their petrol variants” within two years, has led to a lot of excitement and speculation around the future of EVs in the country. 

With the sale of electric buses rising by 1200% and that of four-wheeler electric vehicles rising 230% over the past couple of years, the data certainly seems to justify this excitement. Adding to the buzz, was Suzuki Motor’s recent announcement that it would invest Rs. 10,440 crore towards the manufacturing of electric cars and batteries in India, with the objective of rolling out affordable EVs in Japan and India by 2025. A study has revealed that the EV market is likely to be valued at around Rs. 475 billion by 2025, with electric two-wheelers alone accounting for 15% of the market.  

While the popular belief is that firecrackers and stubble burning are to be blamed for air pollution, the reality is that the real culprit is electric vehicles. Scientific studies suggest that vehicular emissions contribute to greater than 50% of the air pollution, while the contribution of industrial emissions is 10-13%. While these statistics vary around the year depending on weather and other factors, the reality remains that vehicular emissions overwhelmingly contribute to the air pollution crisis, particularly in developing countries such as India. Proof of this reality was also seen during the first lockdown, with air pollution dropping by a staggering 79% – is indicative of the damage that fossil-fuel-powered vehicles wreck on the planet. 

Environmental degradation aside, with the rapid growth of EVs, consumers would have a natural incentive to switch, given that the per kilometre cost is Rs. 1 for EVs, while the same is Rs. 10 for petroleum vehicles and Rs. 7 for diesel vehicles. Furthermore, central and state governments have given a huge push to EVs through tax breaks, subsidies, and schemes, such as the ‘Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME)-II Scheme. 

Though the sector is poised to enter a new period of expansion, innovation, and investment as commercial activities pick up and the Indian economy recovers in 2022, several obstacles stand in the way of EV’s future. While the government is actively supporting EV use in India, insufficient infrastructure, a shortage of high-performance EVs, and a high upfront cost are preventing widespread adoption. There are a number of possible market hurdles that hinder the EV industry’s capacity to meet expanding demand, including an inadequate charging infrastructure that continues to stymie increased penetration in the two-wheeler consumer sector. In the future years, the lack of a viable manufacturing environment for the materials involved with the EV revolution, along with the concentration of the supply chain in select places, is expected to bring these challenges even more into the light.

These problems are particularly likely to emerge in smaller cities, given the rarity of charging stations – as compared to petrol pumps which are dotted even in the countryside. A further challenge lies in the limited availability of nickel and lithium – key components for EV batteries. The recent power crisis of October 2021, wherein India witnessed a record shortfall of coal supplies, must serve as a reminder for India’s overwhelming dependence on coal – with 70% of the country’s power coming from such fossil fuels. For electric vehicles to be truly green, charging stations must be powered by electricity sourced from renewable sources such as wind, solar and hydropower. 

In spite of this seeming myriad of challenges, there seems to be a lot of optimism regarding the future of EVs in the country. A reflection of this is being seen especially in metropolitan areas such as Delhi, where the state government’s decision to mandate the adoption of a search percentage of EVs in cab aggregators’ fleets has received a warm reception. Leading by example, the Delhi government has mandated that 25% of all new cars joining aggregators should compromise EVs, and this number should amount to 50% within two years. A prime example of the success of EVs is seen in the success of electric car aggregator BluSmart, an Uber-Ola like service which has received funding from giants like British Petroleum and Tata Motors. In less than 3 years of operation, the start-up has curbed 2145+ tonnes of CO2 emissions through over 10,00,000 rides provided to customers in the Delhi-NCR region.

With large original equipment manufacturers taking the initiative to enter the EV component industry in order to lessen dependency on imports and achieve the government’s 50 percent localization requirement for government subsidies, the future of the segment is certainly bright. A comprehensive infrastructure that is inexpensive, accessible, and supports all consumer groups, along with a solid finance environment, governmental incentives, and technology developments, is anticipated to position the electric vehicle industry for major expansion over the next decade.

Abhiir Bhalla is an active youth environmentalist at a global level and has been working in the field of environmental conservation for over 8 years. Identified by the BBC World News as amongst the foremost youth environmentalists in 2020, Abhiir and his work have been featured prominently in the national and international media

Picture Credits: Unsplash

We publish all articles under a Creative Commons Attribution-NoDerivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

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