Electric Vehicle Market in India

By Aneesh Sunil, Chief Student Placement Coordinator

Electric Vehicles is currently a buzz word of sorts in the Indian market. India has set an ambitious target of 100% electric vehicles in the market by 2030. Here, I would like to explore the major challenges and opportunities for the EV market in India.

According to McKinsey, 375,000 EVs were manufactured by Chinese OEM’s in 2016. The country now has more EV’s on road than the USA. This is due to favorable demand and supply conditions which exist in China. China also has enabled monetary subsidies to boost the favorable conditions. The market is poised to move to non-monetary incentives in a short while.

FAME India(faster Adoption and Manufacturing of Electric vehicles in India) has introduced monetary subsidies back in 2015 but are subsidies just enough to drive demand?

Major challenges for an average Indian consumer looking at an EV purchase -:

1.    Lack of critical infrastructure such as charging stations, quality dealerships and workshops to manage EV break down and failure.

2.    Hybrids are still an expensive proposition compared to combustion engines

A look at the EV value chain is a good start to identifying opportunities-:

1.    Sourcing :

a.    Power train is completely new with electric motors replacing internal combustion engine. As full power is available all the time multi transmission gear boxes are not needed in EVs.

b.    Motor controller helps in determining the distribution of power in an EV. According to Business Wire report released in 2017, the motor controller market is forecasted to grow at a staggering rate of 40% CAGR over the next 4 years.

c.    Battery Packs: The bulk of cost of an EV is it’s lithium ion battery pack. The cost of the high capacity(density) battery pack has been decreasing due to cost reduction due to economies of scale and is poised to decrease further with more learning, advancement in chemical technologies and higher scales of economy.

2.    The assembly of an EV/HEV can take place on the same assembly line as that of its traditional internal combustion engine. This can help OEM’s to accommodate costs until the demand for EV’s exceed IC cars. The Toyota Prius which is build in the same factory along with multiple IC engine cars including Camry Sedan is a prime example of this assembly technique. The only change would be at battery loading and propulsion which would require a line extension.

3.    The government should use its existing utility providers to build charging networks (shared infrastructure) across the country. Renewable forms of energy can be utilized depending on terrain of construction e.g. Tesla Powerwall can be used as high power backup source of solar energy.

4.    Technology Support: Major IT players can help in developing OS for the in-car system which helps in on board diagnosis, Distance to Empty, nearest charging station etc.

5.    Clear road-maps and policies from government

India is at the cusp of a major disruption. We can already see a consolidation in the Indian automotive market.

India’s favorite Japanese OEM’s have already started their work on Indian centric EVs. Will the German’s come forward too or would Indian grown OEMs like Mahindra get the lions share of the pie or Would Mr.Musk resolve his Model 3 production bottlenecks and capture the EV market in India?

Whatever the question, the opportunities in Indian EV market are huge.


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