The demand for electric vehicles has significantly surged over the past few years. In 2020, the market size stood at $220 million, which has hiked up to $3.21 billion in 2022. The EV market in India projects to expand to $113.99 billion by 2029 with a CAGR of 66.52 per cent. Currently, EVs contribute 0.7 per cent market share to the country’s automotive sector. However, it expects to increase to 3.8 per cent by 2027. There are 13,92,265 EV cars on the roads as of August 2022, and the Ministry of Road Transport and Highways predicts it to reach 45-50 million by 2030.
In the early days, generating demand for electric vehicles in the country was a vital concern. Nonetheless, the story has transformed over time. The Indian automobile industry has proved resilient enough to bounce back to pre-pandemic levels in manufacturing and sales. EVs have appealed to the younger, more affluent, and aspirational consumer class, 65 per cent of whom fall under 30 years. In this scenario, 2023 will be the year of massive scale-up in the EV sector with increased penetration, adoption, and investment.
Based on a Morgan Stanley report, the EV sector will constitute 70 per cent of the total two-wheeler sales growth until 2031. Sales of e-2W have increased 404 per cent in the April-September 2022 quarter and reached 277,910 units from 55,147 units in H1 FY2022. With decarbonisation in focus, startups will lead the race of investing in the EV industry and availing government incentives in 2023, while the market share of Original Equipment Manufacturers (OEMs) will start getting on the rails in 2024. However, to accomplish its goals, India has to revamp its EV infrastructure and maintain steady progress in demand and supply.
Investment outlook in the EV ecosystem in India
The primary drivers of electric vehicle growth in 2023 will be changes in policy, the production of batteries at a reasonable price, and expansion of the infrastructure. Additionally, the industry is already showing signs of a tailwind. Incubator programs, shared facilities for prototyping and small-scale manufacturing, financial support through the Credit Guarantee Scheme for Start-ups (CGSS), tax breaks, and consumer subsidies are just a few of the initiatives the Indian government has been putting in place to promote the growth of electric mobility.
To promote local manufacturing of high-tech automotive products and attract capital to the sector's value chain, the Production Linked Incentive (PLI) scheme (with a $3.5 Bn budget) for the automotive industry proposes financial incentives of up to 18 per cent. The PLI program encourages indigenous EV battery production and reduces dependency on imports. As a result, EV prices will drop significantly, and the EV sector will have the infrastructure it needs to thrive.
Green EV Charging stations are the Future
The growth in the EV market has important implications for the electricity grid. There will be a need for extra generation and a need to upgrade and enhance transmission and distribution (T&D) systems. Now that climate change has reached a turning point, the world is working to transform the way energy is used. The EV charging station is powered by renewable energy, which simultaneously reduces its impact on the environment and the grid. An alternative to the conventional T&D response is to add distributed energy generation with storage at or near EV charging stations. Doing so reduces the amount of T&D capacity needed on-peak to serve the EV charging-portion of the total peak demand.
Utilizing green energy to charge an EV helps promote the development of renewable energy sources and lessens the carbon footprint associated with using imported electricity. EVs that are connected to the grid could be used in lieu of or in conjunction with electricity storage in emergencies or during extreme supply shortages to supply power to the grid. V2G. As EVs hook up to chargers in more homes and businesses, it is possible that EVs could be a non-trivial electric supply resource during rare times when the grid is undergoing an emergency.
The reliability of the grid is impacted by typical charging stations because of problems including harmonics, fluctuations, and voltage outages. In contrast, the RCI (Reservoir Characterisation Instrument) provides a number of benefits, including great efficiency, minimal system costs, and a straightforward setup. Have a reliable, connected ecosystem wherein they can locate and plug in to the nearest chargers.
India is on the wheel to make EVs ubiquitous with innovative models, R&D in manufacturing, sustainable infrastructure, and lower costs compared to fuel-based vehicles. Financial incentives on fixed capital investment (FCI), net SGST, stamp duty, and employment generation in the sector will motivate EV manufacturers and OEMs. Conversely, the government will attract more buyers for e-vehicles with lower effective upfront costs, early bird direct benefit transfers, relaxation in registration fees, and discounts on Motor Vehicle Tax. This way, the country aims to create a conducive business environment for investors and facilitate EV penetration with industry-friendly policies.
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