Opinion | India’s electric revolution is here

2020 has been a year where we witnessed the boom in the electric car market in India. There is a growing consensus among automotive professionals and the public alike that the future of vehicles is electric. Several surveys indicate that an overwhelming majority of customers state that they are open to considering an Electric Vehicle (EV) for their next purchase. These developments signal a turning point for EVs in India, which has thus far been a laggard in adopting the EV revolution.

In the past, EV adoption was constrained in India by 4 barriers:

1) Lack of suitable vehicles, with practical range and performance

2) Inadequate charging infrastructure for EVs

3) Higher price of EVs

4) Technological uncertainties causing durability and reliability concerns

Even as late as 2017, the above barriers were unaddressed. EVs that were available then had a usable range of under 100 km and were not comparable to ICE vehicles in terms of performance or convenience. There were virtually no charging stations even in major cities. Despite some government incentives for the purchase of EVs, the cost of an EV was nearly twice that of the comparable ICE. Finally, there was little done to assure customers on the reliability or the durability of EVs. As a result, EV purchases were limited to EV enthusiasts.

Over the last 2 years, there have been significant developments to address these barriers. EVs with higher range were introduced, creating a strong demand in fleets due to the low running cost of EVs. Several charging points were set up in major cities, driven by the efforts of EV enthusiasts and fleet users. In addition, several fleets installed their own captive chargers as well, driven by strong total cost of ownership advantage of EVs. The government also drastically brought down the cost of EVs through FAME II subsidies of up to 3 Lacs for EVs in commercial use, reduction of GST rate to 5%, waiver of road tax & registration in several states, and income tax benefits of up to 1.5 Lacs for individuals. OEMs offered higher warranties and AMCs to support fleets and address their anxieties. However, personal buyers still did not have strong offerings to address their concerns.

However, in 2020, the EV industry in India is in a completely different place altogether. The EV industry market has grown by 128% in FY21 at 2955 units as compared to 1295 units in FY20. The barriers that long threatened adoption have been greatly addressed. With truly high-performance cars with certified battery range of over 300 km, such as the Nexon EV, customers have access to fun and a practical option that just happen to be electric. Both the government and private players are installing charging stations across cities and highways. The government recently announced its plans to install at least one e-charging kiosk at around 69,000 petrol pumps across the country. Tata Power alone has more than 180 charging stations across 20 cities, and is planning to have over 700 charging stations across most major cities and highways by March 2021. Furthermore, backed by global studies that indicate that 85% of charging happens at home, OEMs are offering installation of home charging points, which will address the charging needs of most EV owners.

In addition, with lower GST and road tax & registration waivers, the on-road price of an aspirational EV such as the Nexon EV is now only 20-30% more than that of a comparable ICE vehicle. With special state incentives in Delhi & Mumbai, the on-road price is inching close to that of an equivalent ICE vehicle. Considering that the running cost of an EV is 20% - 25% of an ICE vehicle, this differential is easily recovered over a few years of vehicle ownership. In addition, OEMs are offering an 8 years warranty on battery and motor to completely allay all concerns on durability and reliability. As a result, today’s vehicle intenders have a strong reason to consider EVs.

Department of Heavy Industry has allocated funds of ₹1,000 cr for the development of charging infrastructure in India. As a result, 1,000 charging stations is expected be installed across cities and highways. In addition, the Ministry of Power has mandated enabling 20% of parking spaces in commercial and residential buildings, which will create thousands of charging points across India. Most major OEMs are planning EV launches, resulting in multiple options for customers. In addition, cost reduction in EV components is expected through economies of scale and localization, which will further allow OEMs to bring EVs in more mainstream vehicle segments.

As a result, the future of EVs is bright in India, and we will see accelerated EV adoption over the next few years, as customers realize the benefits of EVs. The EV revolution has kick-started, and will transform mobility in India over the coming years.

The author is President – Passenger Vehicle Business Unit, Tata Motors. Views expressed are his own.