Why Experts Are Optimistic About Electric Vehicle Penetration in India

Last week, NITI Aayog and Technology Information, Forecasting and Assessment Council (TIFAC) released a report which forecasts 100 per cent penetration of electric two-wheelers in the Indian market by FY2026-27. “India is at a crossroads and a shift to electric mobility, particularly, in the two-wheelers segment, may happen faster than anticipated. If there is sufficient installed capacity of electric two-wheelers and charging infrastructure, then the sale may even reach about 250 lakh units,” said the public policy think tank’s report.


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EV adoption has been gathering momentum in India for the last few years. New products are hitting the market every month and experts feel that technologies like battery swapping will make it much more affordable and convenient to own and operate an electric two-wheeler.

What are the other factors leading to this optimism? We asked some experts.

Why the optimism

“At Battery Smart, we are very optimistic that this is possible not just for two-wheelers but also three-wheelers, given the strong demand and awareness around EVs in recent times. There is a consistent push to make this happen at the Central Government level and there is healthy competition among states to incentivize both manufacturing and demand of Electric vehicles (EVs),” said Pulkit Khurana, co-founder, Battery Smart.

He also feels that while the biggest deterrent has been the high cost of EVs, the FAME II scheme has played a pivotal role in EV adoption and its continuance or expansion in some form will be necessary to make a 100 per cent shift happen. “EV sales have grown multifold in the last 12-18 months. Recently, Delhi announced 25K EV sales in just the last 6 months. Our government’s push towards promoting battery swapping will be the next impetus required for India’s EV transition,” said Khurana.

FAME or Faster Adoption and Manufacturing of Electric vehicles was introduced by the government of India in April 2019 to encourage the switch to electric mobility. The idea is to cut down on fuel usage and reduce carbon emissions as per the COP 21 agreement. An outlay of INR 10,000 crore for a period of three years was approved under FAME 2.

“While government support for the EV ecosystem in India has been steadily rising over the past ten years, private investors are now filling that void by providing relevant entrepreneurs with funding and mentoring. Startups and investors alike will have plenty of chances in the upcoming years to disrupt the mobility market with cutting-edge green technology,” said Ankur Mittal, partner, Physis Capital.

Recently, the ministry of road transport and highways (MoRTH) announced that it has identified about 700 sites along the Golden Quadrilateral Highway, east-west and north-south corridors and greenfield expressways, to develop wayside centers equipped with various types of charging points for EVs.

“There are clear signs that penetration will reach 100 per cent by FY 27. EV sales have grown by over 200 per cent YoY over the last couple of years. The rising price of petrol combined with a favorable policy will only drive this growth rate even higher. On the policy side, we are seeing states competing to offer the best subsidies for purchase of EVs. At the same time, the central government is clearing hurdles for the EV ecosystem to come up, especially around battery charging and swapping. The swapping standards which are expected to be finalized at the end of this month will allow for unique and convenient business models around 2W EV ownership that will make the choice to buy an EV all the more easier for consumers,” said Ashwin Shankar, founder and CEO, BatteryPool.

Some, however, feel that though EV adoption will continue to gather momentum, to expect 100 per cent of 2W to be electric in India is far-fetched. “The Indian 2W market is divided amongst scooters and motorcycles with the latter having the lions share at 65 per cent. While the former (scooters) will see rapid adoption, motorbikes will not see aggressive electrification as scale. It will be a gradual move. Whereas mobility for commerce and to some extent personal mobility will transition to electric because of the lower running costs, government subsidies, rising fuel costs and almost parity in price between an electric and ICE vehicle. The scooter segment will transition aggressively to EV. Motorbikes will become more leisure, premium and performance-oriented,” said Arjun Seth, an investor and a member of Indian Angel Network (IAN), who has backed four companies in the EV space.

That said, Seth also feels that since online deliveries are also done on motorbikes, we can expect 20-25 per cent of the motorbike market electrified. “Electric 2Ws already have a lower total cost of ownership compared to their petrol counterparts – you can buy electric 2Ws today that cost as much as their petrol counterparts and are up to 90 per cent cheaper to operate. The high price of petrol combined with strong tailwinds to build out the EV ecosystem (charging, finance) will only help in the rapid adoption of EVs in the 2-wheeler space,” he added. Seth’s best-case scenario is 60 per cent of the 2W market electrified by FY27.

Pandemic, a dampener, or a blessing in disguise?

The pandemic has given us many lessons, one of which is the awareness that we need to tackle pollution urgently. Those living in cities, in particular, have started believing that a 100 per cent EV shift has the potential to give us what our future generations deserve. “While the pandemic led to short-term disruptions in a lot of manufacturing and development efforts for EV manufacturers, post-pandemic there is more than expected demand for EVs,” said Khurana.

Further, the pandemic also led to the electrification of the e-commerce delivery fleet, particularly last-mile delivery. “Electrification has taken off rapidly in this segment thanks to the lower TCO of EVs. Today, almost 100 per cent of new fleet vehicles being deployed by e-commerce and last-mile delivery operators are electric – this transition started during the pandemic,” said Shankar.

The pollution and the price are two major drivers of why both founders and investors are bullish on the future of EVs in India. “Businesses are also quick to recognize the economics and the positive messaging that comes from switching to EVs for last-mile delivery and hence we are seeing greater adoption and demand coming from these large companies driving growth across the sector. In addition, the VC sector has fuelled a strong financial momentum for the EV industry in response to the growing demand for EVs,” said Mittal.

The pandemic did come with supply chain challenges. For instance, chip shortages, shortage of containers, unavailability of parts, component shortages and shutdowns disrupted supply chains the world over. But, things are slowly improving and we hope normalcy will return where supply chains can be aligned with the growing demand, said Seth. Awareness around climate change, affordability, running costs, subsidies for players in the ecosystem and technology has opened up many opportunities in the areas like charging infra, battery swapping, etc which may soon push many EVs on roads.

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