According to data from S&P Global Ratings, the penetration rate of electric vehicles (EVs) in the Indian market last year was just 1.1 per cent, compared to the Asian average of 17.3 per cent. Moreover, Moody’s, another noted rating agency, pointed out that even though India has the world’s third largest car market, EV penetration is only around 1 per cent. Certainly this figure looks depressing. But there are many reasons due to which India is lagging behind in EV adoption.
What’s troubling India’s EV adoption?
EV industry experts talk about the biggest issues with India’s EV adoption and the way forward to ease the journey for EVs. Despite making significant progress, there are still many challenges that need to be addressed including the high initial cost of EVs, limited charging infrastructure, especially in remote areas, and the need for strong policies to support the recycling and disposal of batteries. requirement is included.
Acknowledging the country’s current EV penetration rate of 1.1 per cent, which is less than the industry’s desired expectations, Nehal Gupta, Director, AMU Leasing told ABP Live that there are several factors contributing to the challenges in accelerating EV adoption. “Limited availability of charging infrastructure and concerns about range anxiety present barriers to potential buyers. High initial costs and lack of affordable EV models discourage many consumers. In addition, the performance, maintainability and resale value of batteries apprehensions increase the prevailing hesitancy.”
In its quest for a green and sustainable transport sector, the government has set ambitious targets for electric vehicle adoption, aiming to significantly increase EV sales and set up an extensive charging infrastructure network. The government is actively working with industry players to draft favorable policies to facilitate faster EV adoption.
Appreciating the government’s effort in implementing EVs in India, Sushant Kumar, Founder and Managing Director, AMO Mobility, pointed out some macro- and micro-level challenges.
“In the four-wheeler and commercial vehicle segments, the biggest challenge is the inadequacy of charging infrastructure, while the demand generation constraint in the two-wheeler segment, though the most optimized segment, is two-wheeler EVs.”
Beyond these challenges, Kumar faced some hurdles such as the limited number of quality suppliers, cost-effectiveness in components, and the need to establish a comprehensive ecosystem. He stressed that EVs are the future of transportation and the government is taking all necessary steps to ensure better market penetration.
He said that to overcome these hurdles, a skilled and knowledgeable workforce is required. “Despite existing demand, a large section of the population still prefers internal combustion engine (ICE) vehicles as preferable. However, there are opportunities for improvement in areas such as last-mile delivery, bike rental and daily commuting , as EVs provide a cost-effective alternative.” Addressing problems related to battery availability and supply will be critical in accelerating EV adoption. Comparing strategies and learnings from other countries can also contribute to the development of EVs in India,” suggested Kumar.
Ashish Deswal, founder of EarthtronEV, echoed the same concern. He mainly pointed to the lack of enough charging stations across the country. “Inadequate charging infrastructure is a major barrier to EV adoption in India. Charging stations are still relatively rare, especially in rural areas, which limits the convenience and practicality of EV owners,” Deswal said.
Apart from the charging infrastructure, the cost of buying an electric car is high as compared to conventional vehicles. Deswal said, “EVs generally have a higher cost than ICE vehicles because batteries and other electrical components cost more. This price difference makes EVs less affordable for many consumers in India, where the price Sensibility plays an important factor in purchase decisions.” ,
There is a lack of awareness and knowledge about electric vehicles among the general public. “Many people are unfamiliar with the benefits of EVs, such as reduced carbon emissions and reduced operating costs. Awareness through education and targeted campaigns can help increase adoption,” Deswal said.
Sustained efforts in infrastructure development, policy support and consumer awareness are key to accelerate EV penetration in India.
Sheru CEO Ankit Mittal said, “Although EV penetration in India seems to be low in percentage terms, certain categories have seen significant growth in EV sales in recent years. 2022 was the first year in which EV sales will exceed 10 million mark in a single year. For three-wheelers, more than 50 percent of all vehicles sold in 2022 were electric, making it the preferred fuel type. However, the impressive growth in sales of electric variants have been seen, yet they are still in the single digits of their respective categories.”
The main barriers to increased adoption are high upfront costs, fewer financing options than petrol or diesel vehicles, and a lack of widespread charging infrastructure. However, work is underway to resolve these problems, Mittal said.
“Subsidies to reduce vehicle upfront cost, increasing number of financial institutions providing loans, and efforts by both industry and state to widen charging infrastructure will help address these issues and increase EV sales, ” They said.
slowly gaining traction
However, emerging problems could not stop the development of EV implementations. In recent years it has gained momentum, albeit slowly. Some progress has been made with government support.
The Center launched the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) scheme in 2015, which provides financial incentives for purchase of EVs and setting up of charging infrastructure. FAME-II, launched in 2019, focuses on promoting manufacturing of EV components and setting up charging infrastructure across the country.
On top of that, to encourage EV adoption, the government also offers various incentives and subsidies. These include lower GST rates on EVs, income tax benefits on loans taken for EV purchases and financial assistance for setting up EV charging stations.
