Electric Car in India Finally Showing Potential to Scale

Growing awareness about air pollution and government support toward adoption of electric vehicles (EVs) is driving the market for electric cars in India. Valued at $71.1 million in 2017 by P&S Intelligence, the Indian electric car market is projected to grow by almost 10 times during the forecast period 2018–2025, eventually generating a revenue of $707.4 million! And, it’s not just the total revenue, which is expected to be high during the forecast period, but also its CAGR (34.5%).

Electric cars are essentially battery-operated cars that produce little or no emission. Based on technology, the electric car market in India has been segregated into plug-in hybrid electric vehicle (PHEV), battery electric vehicle (BEV), and hybrid electric vehicle (HEV). Among these, BEV led the market in 2017 with over 70% sales volume share. Similarly, the categories of the domain when segmented by battery are lithium-nickel-manganese cobalt oxide (Li-NMC), lithium-iron-phosphate (LFP), and others, among which the LFP category led the market in 2017 with 65% sales volume share.

Talking of the market drivers, India is expected to adopt BS VI emission norms in 2020. Aimed at reducing vehicular emissions even further, this move is predicted to drive the electric car market in India rapidly. To encourage EV adoption, the central and state governments are actively formulating favorable policies. For instance, the Central Government launched the FAME scheme in 2015, to bring down the price of electric cars across the country.

Similarly, in 2017, the NITI Aayog brought out a scheme for the construction of e-vehicle charging points along the Indira Gandhi International Airport-South Delhi-Noida corridor. Under this, 135 charging stations, including 89 slow alternating-current (AC) stations and of 46 quick charging direct-current (DC) stations are to be built at 55 locations. The governments of several states have come out with policies and schemes of their own, all of which are expected to aid in the growth of the Indian electric car market.

For instance, the Karnataka government offers 100% reimbursement on expenses incurred to set up EV manufacturing plants on agricultural land. Similarly, the Maharashtra government offers complete exemption of registration fee and road tax on electric vehicles. Under this scheme, EV and electric battery manufacturers also get 20% incentives. In another such initiative, the Uttarakhand government will set up an EV research hub in the state and offer every trainee a stipend.

All these factors have radically changed the scenario of the electric car market in India in recent years. Earlier dominated by Mahindra Electric Mobility Limited and Toyota Kirloskar Motor Pvt., the market has seen the entry of several new players, including Tata Motors Limited, Honda Motor Co. Ltd., and Hyundai Motor Company. All these manufacturers are launching electric cars with improved range, as short range has been somewhat discouraging people to buy electric cars. An example would be Mahindra Electric Mobility Limited’s eKUV100, which can run up to 140 km on a single charge.

Thus, we see that stricter emission norms and government incentives will lead to increase in electric car sales, taking the domain forward.