The cumulative EV sales in all vehicle segments could cross over 100 million units by FY30, 200 times its current market size. At the end of March 2020, the total number of registered EVs in India stood at only half a million.
Vaibhav Pratap Singh, senior analyst at CEEW-CEF, said that availability and affordability of capital for OEMs, battery manufacturers, charge point operators, and end consumers would be key to determining the pace, efficiency and cost of India’s transition to EVs.
Consistent policy support would also be critical. The recent announcements by the government to set up EV kiosks across 69,000 petrol stations in the country and permit sales and registration of EVs without batteries can give a boost to the sector, Singh added.
The study estimates that realising India’s EV ambitions would require an estimated annual battery capacity of 158 GWh by FY30.
This presents a massive market opportunity for domestic manufacturers. Even if 50 per cent of the battery manufacturing capacity were indigenous, investments would amount to as much as $6.1 billion (around 42,900 crore) by FY30.
Further, the cumulative investments required would exceed $12.3 billion (around Rs 85,900 crore) in case of 100 per cent indigenisation of battery manufacturing. The recently approved production-linked incentive (PLI) scheme for the automobile and battery manufacturing sectors could help enable the right ecosystem for indigenisation and job creation in the EV sector.
According to the study, India would also need a network of over 2.9 million public charging points by FY30, beyond the in-home charging points. This could create another massive market opportunity requiring cumulative investments of up to $2.9 billion (around 20,600 crore) until 2030. Currently, there are around 1,800 public charging points across the country.
The study recommends capping rental costs for public charging stations and creating a charging infrastructure investment facility to strengthen the business case for charging infrastructure.
The EV market
also presents a huge opportunity for India’s automobile loan market. According to the study, if 50 per cent of the EV upfront costs – $103 billion (around Rs 7.21 trillion) – required through FY21–FY30 were to be financed through debt, the banking sector would have to more than triple its current advances of $31 billion (around Rs 2.17 trillion) towards vehicle loans in the next 10 years. The study highlights that distributing all the upfront costs as well as operating costs (including fuel, maintenance, and insurance) into equal annual costs – a method called annualisation – would help navigate the challenge of high upfront purchase cost. The solution could help create a track record of performance and repayments and thus help with the creation of a vibrant loan market for EVs.
In addition, the study recommends development of policies around battery reuse, recycling, and leasing to help bring down the high upfront cost of EVs. To encourage uptake of EVs, the study also recommends creating state EV policies which combine incentives for EVs with disincentives for internal combustion engine (ICE) vehicles.
India’s 2030 EV ambitions, signalled by NITI Aayog, states that 70 per cent of all commercial cars, 30 per cent of private cars, 40 per cent of buses, and 80 per cent of two-wheeler and three-wheeler sales in 2030 would be of EVs.