Passenger Vehicles to Account For Only 5% of EV Sales By 2030: Study

In a study undertaken by consultancy firm Arthur D Little, it was found that electric vehicle sales in India by 2030 would only account for 30 per cent of the overall number. The study further revealed that electric passenger vehicles would be the lowest contributor with an expected share of just 5 per cent of the overall EV sales by the end of the decade – 10 per cent of the total passenger vehicles sold. The report cited that the majority of the growth would come in the form of electric two- and three-wheelers which have so far been the segments seeing the largest sales and adoption of electric mobility. Electric three-wheelers are expected to constitute over 90 per cent of overall three-wheeler sales by 2030 with electric scooter and motorcycle sales said to account for up to 35 per cent of overall two-wheeler sales.

The report cited several reasons for the low EV adoption in the passenger car segment including the lack of infrastructure, low buyer confidence, a lack of choice in the market and product safety mishaps. The study also cited costs as a major contributor to the low adoption of electric passenger cars, with models even when domestically manufactured costing a notable premium over their standard counterparts. Additionally a significant number of EVs in the segment were fully imported models.

The study estimated EV sales will cross 30 per cent of overall sales by 2030 though it would primarily be driven by two-wheelers.

The study estimated that sales of electric vehicles in the country would leapfrog to the 10 million unit mark by the end of the decade compared to 0.4 million units in 2021. The primary driver for the growth though is expected to be the two-wheeler industry with the rest of the segments accounting for only about 13 per cent of overall EV sales. The firm estimated that outside of three-wheelers none of the segments would achieve the EV adoption targets set by the government under the FAME II scheme in 2030

The study also recommended several measures to help push the growth of EVs in the domestic markets such as increased focus on product development, improvements to the power generation grid and charging infrastructure, increased localisation of components for electric vehicles and measures from the government to further incentivise and push for adoption of EVs. The study also highlighted measures put into place by the government to push electrification including reduced GST on EVs and chargers and the upcoming battery swapping policy.

Arthur D Little estimates that cost of ownership of EVs could further reduce in the coming years which could help demand

In a global comparison of EV readiness, India ranked 11 out of 15 countries involved in the study. Norway lead the charge in setting the study benchmark based on the criteria including customers readiness, infrastructure readiness and government readiness. India was classified as a Starter country with key challenges to solve including costs and EV-conducive infrastructure. India had a government that was ready to push for EV adoption but lacked the infrastructure to support the growth.

Barnik Maitra, Managing Partner & Chief Executive Officer, India & South Asia, Arthur D. Little, said "While studying global EV markets, we found that market readiness and EV adoption are driven by different factors in different regions. In some markets, environmental friendliness is the key, while in others, it's the cost of the EV. Many countries, especially those in our Starter group including India, primarily focus on cost.”

The studies estimated that with global battery prices expected to fall in the coming years India could see EVs becoming more affordable which could boost uptake. The company said that while the current estimated cost of ownership over 1.5 lakh km for EVs stood at roughly 8 per cent lower than a conventional internal combustion engine car it could increase to as much as 30 per cent by the end of the decade.