“Electric vehicles are an essential strategy in the immediate term to reduce local emissions and help improve local air quality.” – Kevin Emerson
An electric vehicle is a vehicle that is propelled by an electric motor instead of an internal combustion engine. As these vehicles use electricity rather than combustible fuel, they do not cause pollution, global warming, and depletion of natural resources.
The Scope for The Growth of EV Industry in India
The electric vehicle industry of any country can grow only by the factors like the high demand for energy-efficient commutation, the Government’s support with the electric charging infrastructure, favorable subsidies, tax reductions, etc.
India ranks as the world’s 4th largest automobile market & the 2nd largest two-wheeler market. And so, it is enormously dependent on oil imports. The rising price of petroleum products to run these vehicles has affected the consumers. EVs that need electricity to run will decrease the operating cost significantly.
The country is also experiencing an alarming level of pollution. It is high time to reduce Carbon emissions. It is estimated that EVs can cut down carbon emissions by 37%. Hence there is an incredible demand for environment-friendly Electric vehicles in India. These reasons are pushing the Indian Government to promote the adoption of Electric Vehicles.
The biggest hindrance to the adoption of EVs in India is its high cost. To resolve this issue, the government came up with the Fame policy (Faster Adoption and Manufacturing of Hybrid and EV) which focuses on giving monetary incentives to the EV consumers to balance the price difference between the EVs and ICE vehicles.
In 2019, the government of India promoted EV adoption, by announcing a custom duty exemption as well as a 12 to 5% Goods & service tax reduction for Electric vehicles. Further an additional income tax deduction of INR 1.5 lakhs was offered on the interest paid for the EV loan. This led to a 20 % increase in the sales of electric vehicles (excluding sales of e-rickshaws) in 2019-20 as compared to the previous year, as per the report of SMEV (Society of Manufacturers of Electric Vehicles).
The Government also brought in FAME II which offers a total incentive of INR 10,000 crores from 2020 to 2022. The Other incentives include exemption from road tax & registration fees.
To further improve the adoption of EVs all over the nation, the MORTH – Ministry of Road Transport and Highway declared that all the states & union territories of the country can register as well as sell EVs devoid of pre-fitted batteries.
The Indian Government has set a target of 30% electric vehicles by the end of this decade. Not just that, the Indian Government also aims to be the next EV manufacturing hub for the world. This goal can be itemized as sales of 70% of commercial cars, 30% privately owned cars, 40% of public transport buses and 80% of two-wheelers & three-wheelers must be in the EV segment by 2030.
India, with the progression of these goals, could have an EV market of 206 billion USD & have a total sale of 102 million vehicles by the end of this decade. Also, with the realizing of this goal India must own a network of over 2.9 million public charging stations by 2030.
A report by ISEA (India Energy Storage Alliance) mentions that this market is anticipated to reach over 6.34 million units per annum by the year 2027. This report covers the market spectrum of Electric Vehicles, EV batteries as well as the electric charging infrastructure and is anticipated to grow with a CAGR of 44% in the period of 2020-2027. Hence, this is a profit-promising industry in India.
India’s Challenges & Plan related to its ‘Electric vehicle Industry’
There is a limitation of the availability of lithium in India. Lithium is an indispensable element for the production of lithium-ion batteries used in Electric Vehicles. Importing this element from other countries escalates the manufacturing cost of EVs, as the battery is the most important component of EVs and its cost covers 40% of the total vehicle cost.
To combat this issue India has set up its first-ever lithium refinery in its Gujarat State. The leading companies in India such as the TATA Group, the Adani Group have planned to establish their lithium battery manufacturing plant here. The effort to be self-reliant for lithium element has led to the discovery of 1600 tonnes reserves of lithium by The Department of Atomic Energy, Government of India, in its Karnataka state.
India is also putting a research effort to find lithium-ion battery alternative technology like sodium-ion batteries to ensure its aims related to its EV industry are achieved smoothly.
The other important aspect that must be addressed to develop this industry is the electric charging infrastructure. So, the Indian government has planned to set up one EV charging Station every 25 Km with its FAME II program. The country’s Department of Heavy Industries (DHI) summoned companies with EoI (expression of interest) to put up around 1500 EV charging stations on the expressways & highways all across the country. This effort was taken to resolve the EV consumer’s concern that EVs are not appropriate for long-distance traveling. The DHI also permitted 2,636 EV charging stations in 62 major cities of all the states & the union territories under the FAME II program to make sure that there is at least one EV charging station in every 3 square km area.
This year, A company named Hindustan Petroleum Corporation Limited along with Magenta initiated a new idea of “Charge Grid flare EV charger” for the first time in India. It is an energy-saving efficient LED street lamp integrated EV charger. It is built to suit Indian weather conditions with online & remote monitoring feature. The company sets a target of more than 1000 units of installation of these Charge Grid flares by the end of this year.
The Effect of Pandemic on The Indian EV Industry
According to SMEV, the EV industry was on track of progress despite the covid-19 pandemic. In the fiscal year 2020 electric vehicle sales included 97.43% which equals 1,52,000 Electric two-wheelers, 2.17% (3,400) electric cars and 0.38 % (600) buses
This will continue to improve further in the fiscal year 2021, due to the right move by the government as well as the industry. This industry has a high chance of escalating in the post-pandemic times as compared to the badly affected segment of IC vehicles. This is because there is a high probability of people switching over from the over-crowded public transit to EV two-wheelers as the expense for both remains the same.
With the booming of this innovative industry, there opens a myriad of business opportunities in this segment. This includes:
- EV Manufacturing/selling
- EV Spare Parts Manufacturing/selling
- EV Charging Station
- Solar charging station
- Portable Charging Station
- EV Charging Station Management
- Home Charging Station Setup Service
- Charging Station Setup Training Service
- Electric car battery manufacturing
- Battery swapping
- Services to convert ICE vehicles into EVs
- Last-mile connectivity solutions
With a country like India where there is already a high demand for the EV sector, there is surely a reserve of abundant profit promising opportunities to unearth.