Understand the Elements of Indian Electric Vehicles Market

Indian Electric Vehicles market is ta very early stage and it has a lot of opportunities. In this piece of content we have compline an overview of the entire Indian Electric Vehicles market.

Market Overview

Two-wheelers (scooters, motorcycles) and three-wheelers (autos and rickshaws) are the most common vehicles in India, and they play an important part in last-mile mobility. Car ownership is low, with only 22 automobiles per 1000 person, but two-wheeler ownership is among the highest in the world.

Electric cars (EVs) represent for less than 1% of total vehicle in India. The market is predicted to grow at least £4.8 billion (INR 475 billion) by 2025. Two-wheelers are the most popular with 62% of the market share, followed by three-wheelers with 37%.

The Indian electric vehicle market differs greatly per state, depending on demographics, income levels, regulatory landscape, and urbanization.

  • The state of Uttar Pradesh, for example, has experienced a large uptake of electric two-wheelers despite having one of the lowest urbanization rates in the country.
  • Maharashtra, on the other hand, has the largest penetration of electric three-wheelers and passenger automobiles due to its greater urbanization rate.

Electric two-wheelers are expected to attain 15% penetration by 2025, up from 1% today.

The market for low to medium speed electric two-wheelers (up to 40 kmph) with lead-acid batteries is currently dominated by lead-acid battery models, but demand for lithium-ion battery models is rapidly growing due to government incentives and demand from bike and scooter rental companies such as Vogo, Yulu, and Bounce.

Many OEMs have released high-speed (>40km/h) electric scooters, with two (Ather, Ola, and Okinawa) successfully meeting the FAME II scheme’s local production criterion and so unlocking subsidies. Across the country, Hero Electric, Ola, Ather Energy, Ampere, and Okinawa are developing manufacturing facilities.

In various regions, including Delhi, Bihar, West Bengal, and Uttar Pradesh, three-wheelers are the most common means of last-mile connectivity, and the electric three-wheeler market is likely to grow significantly. Converting pedal rickshaws into electric rickshaw has more potential for growth.

While most electric three-wheelers are low-speed, the high-speed market, particularly in the cargo segment, is likely to develop.

The battery swapping model for supplying power has avoided the lack of charging infrastructure, but a mix of both models is expected in the future.

The four-wheeler market now has the lowest EV penetration of 0.12% (3,400 electric passenger cars sold in 2020), but in an optimistic scenario, this is going to rise to 5% by 2025. Fleets, such as taxi and freight delivery services, are helping the market to become more stable. The commercial fleet category is expected to have a penetration rate of 20% to 30%.

Limited market offerings, high upfront costs, insufficient battery life, high reliance on imports (with related expensive tariffs), low range, power outages, and, most importantly, an underdeveloped charging environment continue to hinder four-wheeler customer penetration.

The electric four-wheeler market is currently dominated by only few manufacturers, although several new local and international competitors have entered the market in last 1 year. Hyundai and MG Motor are actively importing their electric vehicles to India as CBUs or SKDs (see glossary). Some Indian companies like Tata Motors and Mahindra Electric are manufacturing locally.

By 2025, EV components will represent a £2 billion business potential. Currently, imported components are used to support EV manufacture in India. Large OEMs, on the other hand, are making forays into the EV component industry in order to lessen reliance on imports and meet the government’s 50% localization requirement for government subsidies.

Indian Electric Vehicles Market Drivers and Barriers

Drivers

  • Government programmes and subsidies that are beneficial.
  • Automobile manufacturers have made significant expenditures.
  • The increasing diversity of products appeals to a wider range of people.
  • Environmental and air quality issues are becoming more well-known.
  • In Tier-1 cities, income levels are rising.
  • EVs have a lower Total Cost of Ownership (TCO) than ICE vehicles.

Barriers

  • To profit from government incentives, complicated requirements and protocols must be met (demand and supply-side).
  • Outside of Tier-1 cities, consumers have limited purchasing power.
  • Domestic battery production is hampered by a scarcity of raw materials.
  • Charging infrastructure is being rolled out slowly.
  • Electric four-wheelers have higher upfront expenses than ICE cars.
  • Issues with the reliability of the electricity grid

Service Opportunities in Indian Electric Vehicles Market

In India, the EV market is showing a great potential for businesses in the areas of services, automobiles, battery supply, charging infrastructure, and the electrical grid. These opportunities can best pursued through a joint venture or other cooperation with a local manufacturers. Services and solutions, electric vehicles, charging infrastructure, and energy systems are among the potential.

Services and Solutions

Micro mobility in the first and last mile, as well as shared mobility EV services have the potential to give opportunities for software developers of route-optimization solutions (especially for female travelers).

How to deal with charging and range anxiety:

  • Analytical solutions to determine the current range remaining in light of weather and traffic circumstances
  • Journey planning tools that take into account battery recharging or changing.

Electric Vehicles and Components

  • Electrical steel, cells, batteries, and battery management systems are all examples of cutting-edge design and innovation in component production.
  • Ride-sharing, employee transportation, and last-mile freight enterprises all benefit from fleet optimization software and services.
  • Vehicle sales, especially premium models aimed at the upper end of the market.

Charging Infrastructure

The widespread use of electric vehicles necessitates a charging infrastructure that is both economical and accessible to all consumer groups.

  • For EV charger makers, partnering with Indian car OEMs to provide charge point hardware and software could be a viable route to market.
  • Affordable and dependable public charging infrastructure, with suitable considerations for the Indian market (e.g. two/three-wheeler compatible); battery swapping technologies, and online portals for charging infrastructure visibility are examples of specific prospects.

Energy System

Longer-term goals for India include providing ‘green’ electricity for EV charging and taking use of the flexibility offered by EVs. Although the power market would need to shift to allow for flexibility solutions, there are several areas where innovation is required right now, and companies may find opportunity in the following areas:

  • Solutions for delivering customer propositions that successfully access flexibility, particularly in the context of electric vehicle charging.
  • Tools for gaining a better knowledge of how transportation, power, and energy are interconnected and may be coordinated.
  • Systems that improve understanding and visibility of the Indian energy system’s current and future conditions.
  • Interventions that are automatically controlled; storage, compensation, and filtering.
  • Technologies that allow the grid to be decoupled from charging demand.

The Indian consumers prospective

  • The market in India is extremely price sensitive. Working to incorporate local components in order to qualify for subsidies can help, as can emphasizing the possibility of lower total ownership costs.
  • EVs are well-suited to Indian driving conditions in general; these are important considerations for product launch. However, it is critical to ensure that safety and performance are delivered in the face of a changing environment, inadequate roads, and a start-stop driving style. Test drives can give you peace of mind.
  • Prospective consumer buyers are concerned about battery life and charging availability – concerns that are typically unfounded given India’s expected usage profile. Nonetheless, route planning software and information on charging station locations may allay fears.
  • Professional drivers are more likely to use them; battery swapping is an interim solution, and when fast-charging solutions become more affordable, there will be a ready market for them.
  • Customers are concerned about getting servicing and maintenance for their electric vehicles; consider bundling these services with the vehicle purchase.
  • Vehicle ownership is a status symbol in India, with larger private vehicles being highly coveted. Encourage the adoption of electric micro mobility solutions or 2-wheelers by assisting owners in demonstrating their environmental credentials, which is also socially desired.
  • The user experience of electric vehicles is determined by the ecosystem as a whole; it is therefore critical to interact and form alliances in order to help avoid a negative experience that is beyond one’s direct control.

At Inverted Energy we have published an E-BookEV Ecosystem for Dummies

If you want to understand this market, do refer to that e-book.