In the global market for electric vehicles, a lot has happened in the last decade. When it comes to electric vehicle sales, just 8000 electric vehicles were sold globally in 2010, but by the end of 2020, more than 20 lakh electric vehicles will have been sold.
Norway has the highest rate of electric vehicle adaptation. EVs now account for more than half of all vehicles in Norway. Not only that, but in most European countries, the market share of electric automobiles has surpassed 5% for the first time.
In this blog, we will try to analyze EV sales in the Indian market.
Although EV sales in India are modest in comparison to the worldwide market, monthly EV sales during the pre-and post-COVID periods have shown some promising indicators.
In some Indian states, such as Tamil Nadu and Kerala, the number of electric vehicle registrations has increased by 50 times in the last three years.
The rise of the EV market is very phenomenal, it is very close to reaching the tipping point. The major reason behind this is 2 very important factors. First the evolving battery technology and second the declining cost of batteries and EVs.
So, is this tipping point is a result of technical improvement and falling prices, or there are other variables as well?
According to Gerald Kane, a professor at Boston College Carroll School of Management, the tipping point is a result of human beings as it’s more of a socially driven concept.
If we analyze the countries that are about to reach the inflection point in their EV sales, we will be able to find 3 common points.
- Early Adoptors
- Multiple choices for customers based on their requirements
- Ease of Buying in terms of better financing options
The early adopters have a big influence on how the market develops in the future. The market rise is dependent on four stages. The early adopters are first, followed by the early majority, the late majority, and finally the laggards.
The early majority is reliant on early adopter feedback.
One thing to keep in mind is that early adopters are not always early buyers. Industries use early adopters as test subjects to attract early consumers.
When we look at the Indian market, we can see that a big portion of it is based on 2-3 wheeled, low-cost, and low-speed vehicles. If we analyze the sales growth of these vehicles, it is primarily due to a shortage of low-cost, accessible mobility. Although public transportation is available, it is sometimes overcrowded, and everyone values their own space when traveling.
Now here is the thing, these consumers cannot be classified as early adopters. The early adopters for the EV would be those who will buy the 4W EVs. We can consider these consumers as the early buyer and they can act like the ones who create the awareness in society. It means as of now Indian EV industry has not found its early adopters.
The amount of options available to consumers is also a factor in the EV market’s growth. The market will not be able to reach that tipping point if the industry is unable to provide enough options to choose from.
If we look at the European market, we can observe that between 2019 and 2020, EV sales doubled as EV options doubled.
Customers were able to view a variety of possibilities to pick from, which reflects on their annual new EV registration. In 2015, there were 188,000 new electric car registrations, and by 2020, the number grew to 1372,000.
“Product choices become equally or more important when the market starts reaching a point where a majority of the population is ready to purchase EVs“.
When we look at the Indian EV market now, the options are still in the single digits, and the pricing range is nearly identical. It’s not only that customers in India don’t have enough data to compare; they also don’t have enough options to choose from. They want to switch to electric vehicles, but first, they want to compare the EV to their current vehicle. However, we are unable to witness that increase in sales because the Indian EV industry lacks sufficient options.
The government of India has already played its part by introducing the EV charging stations and enabling the initial sale. Now it’s up to the manufacturers to step up and provide options to the customers.
Ease of Buying
If we see the previous 2 options which are early adopters and choices along with ease of buying in the context of EV adoption then ease of buying is the most important factor.
The biggest EV value proposition to consumers will be its operational savings. The way fuel prices are rising, in coming years the EV will become more of a necessity than a luxury. But if the rising fuel prices are going to play an important role in EV adoption so why such low sales. That’s because of the upfront cost of the EV.
In context to the Indian market, EVs are costly. The cheapest EV which is available in the Indian market in the cars categories is Strom Motors. But the drawback is it is a 2-3 seater car. Indian customers only accept 4 seater cars and 4 seater cars are costly.
If we see the financing option, there aren’t many options available for EVs in India.
Seeing the interest of Indian customers in the EVs, it’s high time for both manufacturers and financial institutes to collaborate and brainstorm the new financing models.