Revving Up EVs

India’s electric vehicles market, which was otherwise moving at a snail’s pace, received a boost in Budget 2019. Although at the cost of already bleeding internal combustion engine vehicles market, the electric vehicles segment offers a slew of lucrative business opportunities.

- Amit Singh

For many, the government’s electric vehicle (EV) thrust and the ensuing disruption could not have come at a worse time. 2019 has been a dampener for overall internal combustion-engine (ICE) vehicle sales, given that it recorded the steepest fall in 19 years with sales of vehicles across categories dipping 18.71 per cent. However, the government’s intent is noble and its hurry understandable. India, whose 14 cities count among the world’s 20 most polluted, wants to tackle pollution on a war footing.

At a macro level, the government is worried about climate change, surging pollution and crude oil import bill. Battery-run EVs with zero tail-pipe emission are emerging as a good alternative to ICE vehicles. Hence, the government is deploying a carrot-and-stick strategy to nudge auto sales towards EVs.

Albeit on a much lower base, the country’s nascent EV segment has notched handsome numbers. In FY2018-19, India sold 7.6 lakh EVs against just 56,000 units in the previous fiscal. The segment is dominated by two-wheelers (16.4 per cent) and three-wheelers (83 per cent), as per a recent PwC report. Low-cost e-rickshaws, offering cheap last-mile connectivity, is the humble winner in this race with over 150 small-scale e-rickshaw makers.

While 2- and 3-wheelers will continue to lead the EV market, electric cars are expected to grab 6 per cent share of the new car sales by 2030 and thereafter will touch 28 per cent by 2040, making India the fourth-largest passenger EV market in the world, as per BloombergNEF report.

Government boost

The move to electric mobility has always been the priority of the Narendra Modi government, keeping in mind India’s commitment to reduce its carbon footprint by a third from 2005 levels.

NITI-Aayog is striving to curtail ICE 2-wheelers under 150cc by 2025 and 3-wheelers by 2023. Nearly 80 per cent of all vehicles sold in India are 2- and 3-wheelers.