Two-wheelers are leading the EV revolution in India
India loves electric vehicles. And it has every reason to. But for the fifth largest economy in the world with over 1.4 billion people, the electric vehicle revolution has a different profile than the rest of the world.
The number of electric vehicles (EVs) sold in 2022 in India surpassed the one million threshold, most significantly in the electric two-wheeler segment with 669,845 unit sales, representing a massive 291% growth in a year, according to EVreporter.
The supply chain crisis of 2022 did not shake India compared to major EV markets, thanks to the high adaptation to two and three-wheeler EVs, so much so that India's EV sales surpassed the one million mark for the first time last year, as two-wheelers and three-wheelers grabbed 63% and 32% of the local EV market, respectively.
The main reasons for Indian consumers to choose electric two-wheelers and low-speed three-wheelers are insufficient road infrastructure and affordability. While electric passenger cars represent only around 2% of the Indian EV market, the government is committed to increasing sales of two-wheelers while promoting incentives for more e-scooters, mopeds, and motorbike sales.
Lowering the costs
To bolster the appetite of consumers for EVs, the Indian government has introduced several incentives to increase local EV production and battery storage technologies, plus tax cuts and subsidies to hasten fleet electrification. The government programme on EVs also covers boosting electric bus and taxi production and charging infrastructure. As a result, the e-buses produced in 2022 increased to 1,939 from 1,171 in 2021, says EVreport. One recent development is the tax redemption and income tax deduction for EV owners, announced by e-AMRIT (Accelerated e-Mobility Revolution for India's Transportation).
Several reports indicate the privileges for EV ownership are bearing fruits: According to the Bain & Company report, the high-selling two-wheeler EVs in India have a lower TCO of up to 40% compared to ICE models when the journey is more than 40 km per day. The cost advantages for four-wheelers are currently low for Indian consumers, but especially fleets and the MaaS market are seeing the advantages, notes the report.
Along with the incentives, the willingness to own an EV has gone up: A survey conducted by CarDekho and Omnicom Media Group in 2021 showed that 66% of Indian consumers are planning to buy an EV, 68% of them driven by environmental reasons.
What is the plan for 2030?
Predictions on the volume of the Indian EV market in 2030 vary, but the Bain & Company report gives numbers where each EV segment is poised to grow:
- 35-40% of all vehicles sold in India by 2030 are to be electric, up from 2% in 2022.
- Electric two-wheelers will dominate 40-45% of the EV market, followed by 15-20% of four-wheel passenger vehicles.
- Up to 13 million electric two-wheelers and one million passenger vehicles will be sold by 2030.
Local and international investments are to boost the Indian EV market, according to the report of NITI Aayog and RMI:
- India's biggest online market, Flipkart, aims to become 100% electric by 2030, joining The Climate Group's EV100 coalition,
- The International Finance Corporation (IFC) invested 8$ million in Lithium Urban Technologies, providing commuter services, in 2018.
- Mitsui Group of Japan invested $20 million in the Indian electric last-mile company SmartE in 2019.
As a result, the report expects ride-hailing and rental services to see up to 100% year-on-year growth through 2025. Recent investments support this expectation:
- Electric two-wheeler giant Ola Electric, which Japan's SoftBank supports, announced a $920 million investment to boost electrification in the state of Tamil Nadu.
- Uber has announced plans to introduce 25,000 EVs in the coming three years in the Indian ride-sharing market.
The charging infrastructure is also getting stronger: Tata Power, which has built 2,500 charging stations across India so far, aims to have built 25,000 chargers by 2028, according to Cnbce.
Lithium discovery: Too early to celebrate
Amid all the frenzy in the Indian EV market, the country celebrated the discovery of lithium reserves by the Geological Survey of India (GSI) has excited the investors as the mineral is crucial for micro-mobility vehicles and passenger cars. According to Quartz, domestic lithium supplies may reduce the EV battery cost by up to 7%.
The ambitious plan of the Indian government to achieve net zero by 2070 can potentially increase the demand for lithium. As the country races to transition to clean energy, lithium will be needed as electric vehicles (EVs) and clean energy storage devices are currently dependent on metal.
NITI Aayog report states that EV sales by 2030 may jump up to 80 million, while India is expected to have a 2,700 MW battery storage capacity by 2029-2030. Yet, according to one expert stated to Quartz, it is still too early to tell how much of the deposit could be mined. Eventually, the growing investments in India will spread to every aspect of electrification to fulfill the zero-emission of 2070.