How EVs Are Changing The Auto Sector

Tushar Choudhary, Founder & CEO, Motovolt Mobility

In recent years, India has made rapid progress towards the adoption of electric vehicles (EVs) in the transportation sector. The movement started when the government announced an ambitious plan to achieve 30% EV penetration by 2030. The first major step was the introduction of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) Scheme in 2018 which aims at accelerating EV adoption in the country. As per the scheme, financial incentives worth thousands of crores of rupees are given to EV buyers as subsidies and rebates on purchases. The scheme also helps in setting up of EV charging infrastructure, and R&D by EV OEMs. Further, the Government of India has also reduced the GST on EVs from 12% to 5% to make them more affordable for the common users.

Tushar Choudhary, Founder & CEO, Motovolt Mobility

Impact of EVs on Indian Automobile Sector

The massive risks that India’s agriculture-dominated economy faces from inclement weather activities caused by global warming, have made policy makers and the general public find ways to reduce emissions and adopt a sustainable way of living. With vehicular emissions accounting for more than 20% of the air pollution, transition to EVs is critical for India to achieve its goal of Net-Zero emissions by 2070. These vehicles have near zero-tailpipe emissions and in the years ahead, these are expected to become increasingly affordable and practical to operate for all individual and commercial vehicle users.

As an industry that contributes about 7% to the national GDP, and caters to the third-largest automobile market in the world, the Indian automobile sector is betting on EVs to be its future. As per the Economic Survey 2023, the Indian domestic EV market is going to grow at a CAGR of 49% until 2030. Recently, the country crossed the landmark of 1 million EV sales, and it is expected that there will be 1 crore EVs sold annually by 2030. Millions of direct and indirect jobs will be generated by the EV industry as it powers towards the 2030 goals.

The Government of India has been continuously supporting the EV sector to address challenges faced by the EV OEMs as well as the end-users. For instance, one of the biggest concerns for EV buyers is the lack of charging infrastructure that can free them of range anxiety. Typically, EV batteries take several hours to charge and can run only between 80 to 200 km per charge depending on the vehicle type and model. Alongside continuation of the FAME incentives, the Government of India is now supporting domestic manufacture and development of EV batteries to address these concerns. Custom duty on Lithium-ion batteries used in EVs has been reduced, and even the raw materials and machinery used to manufacture these batteries are being provided with similar reduction and exemptions.

The rising demand for EVs as well as the understanding that even if EVs constitute just 1% of the overall market currently, they are going to be the future, is driving OEMs to compete for early leadership of the segment. While companies like Maruti are still betting on hybrid vehicles, leading domestic vehicle makers such as Tata Motors and Mahindra & Mahindra have already introduced several EV models, and have many more in the pipeline. These and the other carmakers will surely create a lot of impact on the EV ecosystem in the years ahead, and help in expanding the market size as well. However, the salient feature of the Indian EV ecosystem is that unlike many other countries where cars spearheaded the transition to electric mobility, the revolution is being led by 2- and 3-wheelers in India. While the overall share of EVs in the automobile sales is barely 1%, electric 2-wheelers account for about 4% of the vehicles sold in the last year. Going forward, the demand for these affordable and personal commute EV options will keep growing strongly, and continue to play a key role in EV adoption in India in the years ahead.

EVs: The Future of Mobility 

EVs are being rightly seen as the future of mobility. They are one of the best bets for the planet’s bid towards sustainable mobility, and are also a better option as far as operational costs and reduction in noise pollution is concerned. The traditional challenges of cost, range and charging are being focused upon and as further battery improvements and economies of scale come into play, these challenges are also going to be eliminated, and the path for electrification of mobility will be absolutely clear.