Over the last couple of years, electric vehicle (EV) sales have been growing, although they are still a fraction of the overall automobile industry.
A new study by Arthur D. Little estimates EV sales will top 10 million units by 2030, with an overall adoption rate of more than 30 per cent across different categories.
In 2021-22, about 4.29 lakh EVs were sold in the country, up from 1.35 lakh units in the previous year, according to Federation of Auto Dealers Association of India. Passenger electric vehicles accounted for around 17,802 units. In comparison, 27.26 lakh PVs were sold in the country, last financial year.
The study also expects adoption of passenger electric vehicles to be slow; it sees passenger EV adoption at only 10 per cent. Overall, passenger EVs will account for just 5 per cent of the total EV sales by 2030.
There are several reasons why passenger EV adoption is likely to be slow, say experts. The upfront costs still remain high compared to their ICE (internal combustion engine) counterparts. Limited models available currently is also seen as another reason.
But, more importantly, dearth of charging infrastructure, range anxiety and product safety mishaps have led to lower consumer confidence.
"To attain more than 30 per cent EV adoption, India will require approximately 800 GWh of batteries by 2030," said Arthur D. Little.
India's EV industry received around $6 billion in FDI (foreign direct investment) flows in 2021 and may attract another $20 billion in foreign investments by 2030.
Interestingly, despite the obstacles, India is still one of the largest market for EVs in Asia, behind only China and surprisingly ahead of Japan, said Barnik Chitran Maitra, managing partner and CEO, India and South Asia at Arthur D. Little.
"We can build on this position by acting to support product innovation, create reliable charging infrastructure, and provide subsidies to buyers and additional incentives to startups involved in battery R&D, among others," said Maitra.
The study says, while auto manufacturers must focus on product development, component making and after-sales service, it is imperative that suppliers build capability, since localisation of components will be essential to reduce costs. Energy companies also need to improve power generation and distribution, while also developing required charging infra and enabling the grids to manage the loads. The government will also have to make it more conducive for EV adoption via encouraging policies, it added.
Arthur D. Little estimates the EV adoption will reduce India's import bill by almost $14 billion in 2030. The growing EV adoption is also likely to create 10 million new jobs in the country by 2030, it added.
