New Delhi: The Indian electric vehicles (EV) market poses formidable challenges for policymakers, according to consulting firm Bridge to India.

This comes in the backdrop of the National Democratic Alliance (NDA) government’s ambitious plan for an all-EV fleet by 2030, even as the sales numbers have not been picking up to help reach the Centre’s target of 6 million EV sales by 2020.

“Growth in electric vehicles can facilitate greatly in energy transition but the market poses formidable infrastructure and financing challenges for Indian policy makers," Bridge to India wrote in a 1 May note.

EV sales in India grew by 37.5% to 22,000 units in the year ended 31 March 2016, according to industry lobby group Society of Manufacturers of Electric Vehicles. Of these, only 2,000 units were four-wheelers.

The Bridge to India note also compared the EV markets of India and China.

“India has made little progress in electric mobility since the announcement of the National Electric Mobility Mission Plan in 2013 aiming for over 6 million electric/hybrid vehicles by 2020," the note said, adding, “In comparison, China is a world leader in electric vehicles with over 50% global annual market share. Local manufacturers such as BYD and BAIC are world leaders in this market. The country is considering ramping up progress even further and wants 8% of all vehicles to be electrically powered by next year."

The Indian government has been trying to push sales of EVs. The Centre is exploring measures ranging from leasing of EVs to transferring technology to firms for commercial production of lithium-ion batteries developed by the Vikram Sarabhai Space Centre for use in automobiles. It is also exploring a strategy that involves reducing the battery size to bring down EV prices.

“Electric vehicles market is growing rapidly worldwide fuelled by stricter environmental measures, technology improvements and cost reduction in energy storage. It is also seen as a vital link in achieving energy transition. That explains the lead taken by the power minister, Piyush Goyal, on the electric mobility initiative despite automobiles falling under the ambit of the Ministry of Heavy Industries," the note added.

Goyal has stated that the growth of solar power and EVs in India are inextricably linked, given that EVs have batteries that can offer a storage solution to the country’s clean energy push. As solar power generated during the day needs to be stored in batteries, the storage capability of EV batteries could help with grid balancing.

India plans to achieve 175 GW of renewable energy capacity by 2022. Of this, 100GW is set to come from solar projects.

“Growth in sales of electric vehicles will lead to more demand for (renewable) power, help in creating a flexible demand source to tackle intermittency issues of renewable power and reduce reliance on (mostly imported) oil," the note said.

Shifting to EVs will also check pollution and fuel imports. India, the biggest emitter of greenhouse gases after the US and China, plans to reduce its carbon footprint by 33-35% from its 2005 levels by 2030, as part of its commitments to the United Nations Framework Convention on Climate Change adopted by 195 countries in Paris in 2015.

“The ambitions now need to be backed with actions. But while India has a large domestic market, it lacks the fiscal capability and ambition of China and the technology expertise of Japan or South Korea," the note cautioned.