The volume of two- and three-wheel electric vehicles is expected to account for 8-10% and 30% of new vehicle sales in the country by 2025, respectively, due to low operating costs and attractive subsidies, among others, the ICRA rating agency said on Wednesday.
Penetration levels in cars and trucks, however, are expected to remain low in the medium term, he said.
Globally, electric vehicles now account for 4.4% of new car sales during CY2020 and their share is expected to exceed the 5% level this calendar year, according to ICRA.
Electric two-wheeler (2W) and three-wheeler (3W) segments are relatively less dependent on commercial charging infrastructure, due to limited travel time, and may also adopt battery replacement to dissipate load concerns for commercial applications.
In addition, operating cost metrics continue to favor 2W and 3W electricity for commercial operations. In fact, the e3W over the life of the vehicle will be much more economical than its CNG counterparts, he said.
India can capitalize on its vast 2W and 3W segment to become one of the world’s leading manufacturers of e2W and e3W. However, it will continue to lag behind in the electric car segment, CIFAR noted.
It is heartwarming to see positive and proactive policy steps taken by the central government as well as various state governments to accelerate the transition of EVs in India.Shamsher Dewan, Vice President and Group Head – Enterprise Sector Assessments, ICRA
While global automotive demand declined during CY2020 due to the impact of COVID-19, electric vehicles remained on the bright side with growth of around 40% in previous years, he said. he declares.
ICRA said it believes that while the transition to electric vehicles is inevitable, the rate of penetration will be relatively gradual in India, unlike global markets like China, Europe and the United States.
Shamsher Dewan, Vice President and Group Head – Corporate Sector Ratings, ICRA, said: “It is encouraging to see positive and proactive policy steps taken by the central government as well as various state governments to accelerate the transition. of EVs in India.
“However, affordability and range anxiety remain major challenges, particularly in the passenger car and truck segment, and penetration levels are likely to remain low over the medium term.”
The lack of an ecosystem of local suppliers and a heavy reliance on imports make things more difficult. Nonetheless, segments like scooters, 3Ws, and small utility vehicles have already achieved total cost of ownership (TCO) parity with conventional vehicles due to low cost of ownership and attractive subsidy support, and are expected to thus becoming the first to adopt electric vehicles in India, he mentioned.
“We expect the share of electric vehicles to reach around 8-10% in 2W and over 30% in 3W by 2025. Penetration levels in cars and trucks are expected to remain low over the medium term,” Dewan noted. .
According to the rating agency, the global auto industry is undergoing major technological transitions, with a shift from conventional powertrains to electric powertrains.
This transition will affect not only Original Equipment Manufacturers (OEMs) and their suppliers within the automotive industry, but other stakeholders such as oil producers, refineries, financiers and others, a- he declared.
Unlike other markets, especially China, which has taken a significant lead in public charging infrastructure, India may take several years to achieve this level of charging infrastructure penetration, ICRA said. , adding that India could focus on 2W, 3W and buses where the requirement for public charging infrastructure is limited.
Even though China holds a massive lead in the electric car segment, ICRA said it believes India can still work on electrification of its 2W and 3W segment due to favorable TCO and lower costs. ‘a huge volume, which translates into economies of scale.
“Developing local manufacturing of batteries, critical components and charging infrastructure would remain key to nurturing the local EV ecosystem, which is currently weak, reducing costs and improving overall EV acceptability in the country.” , said Dewan.
ICRA also said that the lack of funding remains a major deterrent for increased penetration of electric vehicles and that battery prices need to be reduced by an additional 40% to make significant inroads in India’s electric car market.
ICRA expects the recently announced Production Incentive Program (PLI) for automotive components and ACC batteries to provide much needed boost in locating manufacturing in the sector, he said. .
“While the dependence on imported battery cells will continue in the medium term, Indian companies can focus on locating other parts, including the motor and controller in the short term, and then locating the battery. management system for the battery and other electronic devices over the next three to five years, ”Dewan added.