India’s automobile market is undergoing a transformation as electric vehicles (EVs) evolve from being a function of high fuel prices and government subsidies toward a goal of creating a self-sustaining electric ecosystem. The questions remain as to when EVs will reach a price parity with petrol, diesel and CNG vehicles, whether localized battery manufacturing and continued incentives can bring down the purchase cost and what will it take to address range anxiety in cities and on highways. Strong hybrids and CNG vehicles remain very viable options for Indian consumers at this time, which means that the transition will not happen as a singular technology.
Passenger vehicle segment EV penetration in the past few months has reached around 7 to 8.6 percent, showing a spurt aided by a host of new models launched. Analysts believe that demand is being driven by the 5 percent GST benefit for electric vehicles. Without this benefit, demand would have dropped back significantly as EVs remain expensive compared to their internal combustion counterparts. True electric cars under ₹10 lakh which can sell in volume do not exist at this point, with models like the MG Comet having a very small footprint and two doors to limit appeal.
There is no affordable family EV at this time. Home charging emerges as one of the most significant barriers with large housing societies in places such as Mumbai unable to cater to the needs of all residents in terms of having a charging point. Highway charging infrastructure has developed rapidly and is not a significant source of fear for long distance planned travel, but it is still less convenient than traditional fueling. Multiple apps may be needed and problems with power availability or app issues can thwart travel, but for day-to-day use an EV with home charging capability is frequently described as more convenient than a petrol or diesel car as the car can be charged overnight and be ready each morning without having to visit a fueling station. Range anxiety is seen by many non-EV owners as the largest barrier, but EV owners rapidly learn how driving style, road terrain and weather impact the battery range and plan accordingly. With longer battery ranges in newer models and increasing number of public chargers, this concern has been addressed.
Trips such as Delhi to Mumbai are routinely made with proper planning. The larger challenge remains in terms of home charging access, especially in existing residential complexes. Localized battery manufacturing under schemes such as the Production Linked Incentive program and the National Critical Mineral Mission can reduce costs over time by limiting reliance on imported cells and materials. Some progress is being made on EV components, but cell chemistry production is at an early stage and raw materials are still being purchased from overseas, mainly China.
Experts believe that it will take four to five years before localized manufacturing can scale up, but even then the price differential with internal combustion vehicles may not close completely if current GST benefits are revoked. India’s success in the space of electric three-wheelers has valuable lessons, but the segment has been able to thrive due to low cost technology, a shorter operating radius of five to seven kilometers, fixed route systems and the ability to undertake overnight charging. These parameters are specific to the Indian market and certain elements of Africa and Latin-America and are not applicable to other vehicle segments or on a global scale. The larger takeaway is that higher utilization translates to economics of EVs by offsetting the higher purchase cost over a shorter period of time due to operating cost benefits. Consumer behavior is also changing, with buyers willing to consider a total cost of ownership over a five year period rather than focusing just on the purchase cost.
Technology, safety features, buy-back guarantees and battery-as-a-service options are all helping to bring down barriers to entry and address concerns regarding residual value. The customer base has evolved to include first-time EV buyers who are environmentally conscious as well as those looking to add an EV as the second car or return for another EV having had a positive experience.
Electric vehicles will not dominate the automobile market for the next decade, but a multi-technology scenario is more likely with petrol, CNG, hybrids and EVs all vying for space depending on use-case, cost and infrastructure availability. CNG occupies a substantial chunk of the market at present and if hybrids can receive favorable tax treatment, they may gain further ground. In two-wheelers, where the choice is between petrol and electric, EVs are well-placed to dominate in the long-term. For passenger vehicles the trend will be more gradual, aided by infrastructure development, falling battery costs and continued policy support which reduces the purchase cost without creating demand cliffs.
The discussion points to the fact that India’s EV story is being propelled forward, though it is in a transitional phase. Development of the charging infrastructure, advancement in technology and acceptance by consumers are all positives. The path to a self-sustaining electric ecosystem will require further localization, more affordable mass-market options, home charging capability and appropriate policy which encourages adoption across the spectrum of electric vehicles rather than relying just on short-term incentives.