Electric vehicles will not be able to gain any significant traction due to high prices and lack of direct and indirect fiscal stimulus from the union and the state governments
Electric vehicles will not be able to gain any significant traction in the domestic passenger vehicle market in the next few years and will account for just 3%-5% of the new vehicle sales by 2025, due to high prices and lack of direct and indirect fiscal stimulus from the union and the state governments, said ratings agency ICRA in a note on Monday.
Lack of availability of affordable finance schemes for such zero-emission vehicles will also hamper prospects in the coming years.
One of the key drivers of automobile sales, and residual value of a vehicle after 3-4 years is financing and its penetration. Electric vehicles are generally priced at a premium, and their resale value takes considerable hit after getting out of the showroom as compared to combustion engine counterparts. The concerns on resale value can only be addressed, when there is a large population of such vehicles in the market, which will take some time, the agency said in a note.
ICRA also noted that the battery swapping model , recently announced by the union government will not find many takers since, battery management systems (BMS) of lithium batteries in electric vehicles depends from one OEM to the other.
According to Ashish Modani, vice-president and co-head, ICRA, over the next five years, electric vehicles will account for 8-10% of the new vehicle sales in two-wheelers and intra-city buses, whereas its share will remain about 3-5% in the passenger vehicle segment. However, the three-wheeler segment may witness rapid transition to such vehicles with sizable penetration by 2025.
“Government support in the form of direct/indirect financial incentive and supportive regulation will be crucial for EVs to gain traction in the Indian market. We expect the automotive sub-segments like the three-wheelers, two-wheelers, especially scooters, intra-city buses and small commercial vehicles (SCVs) to emerge as early adopters due to the comparable total cost of ownership with their ICE counterparts," added Modani.