A flagship event for the Indian electric vehicle (EV) industry this year was the buzz created by the big announcements of Ola Electric, followed by disappointment over persistent delivery delays. Beyond these headlines, India’s EV industry has had a solid journey, marked by progress and promise. New electric vehicle registrations more than doubled in 2021, and several promising signs point to further acceleration in 2022.
New two-wheeler companies and new launches are expanding the market. The biggest manufacturer according to his word, Ola Electric, should eventually get started. Governments have increased the incentives. The battery recharging infrastructure has been strengthened. Alternative solutions to public charging stations are being studied. High fuel prices are pushing consumers towards electric vehicles. Much is brewing for a rapid 2022.
This was not the case a year ago. In 2020, as the pandemic restricted mobility, electric vehicle registrations fell 26% to 119,656 vehicles, according to the government’s Vahan dashboard. But, as the economy rebounded, so did electric vehicles. In 2021, India had registered 260,436 electric vehicles up to November. The monthly electric vehicle registration base fell from around 26,000 in July to 42,000 in November. This is expected to continue in 2022.
The 2021 timeline has also seen investment in electric vehicles increase. A total of ??3,298 crore entered the industry in the first three quarters, up from ??1,546 crore over the whole of 2020. A significant portion occurred in the third quarter, with Ola Electric accounting for 81% of total investments. Revolt, Magenta and Vogo were among the first companies to raise funds in the first two quarters.
Nation of two-wheelers
India is essentially a two-wheeler market. In 2019, before the pandemic, sales of two-wheelers outnumbered four-wheelers by a 6: 1 ratio. In electric vehicles, this ratio is further amplified and it stood at 12: 1 in 2021. This year, the electricity needle has shifted from electric rickshaws to two-wheelers. In 2021 (until November), India registered 126,813 electric two-wheelers, 4.6 times more than the same period last year. During the same period, 10,001 four-wheeled vehicles were registered, compared to 3,120 last year.
At present, the two-wheeled electric vehicle market is dominated by startups and first-generation companies. Hero Electric (not related to Hero MotoCorp) dominates the market with a 15.2% share. It is followed by Okinawa and Ather, both of which have seen their share nearly double to 9.3% and 5.3% respectively in the past year. Even if they do grow, expect traditional players like Bajaj and TVS to launch in 2022.
The growth of electric vehicles is also driven by economic considerations. According to Motilal Oswal Securities, a brokerage firm, electric two-wheelers have a cost of ownership 10-20% lower per kilometer than two-wheelers powered by internal combustion engines (ICE). This cost advantage is driven by lower battery costs. Lithium-ion batteries represent 40% of the cost of manufacturing an EV. Over the past decade, prices for electric vehicle batteries have fallen by about 86%, according to BloombergNEF. In 2021, the drop was around 9%.
Sales of electric vehicles also benefit from government subsidies. The Center, for example, has reserved ??8,596 crore in subsidies for vehicle buyers under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) program. The increase in this subsidy in June from ??10,000 per kWh at ??15,000 per kWh should reduce the price of an electric scooter by 10 to 12%. The 30% increase in gasoline prices this year has further reduced the gap between electric vehicles and vehicles with combustion engines.
One of the obstacles to the adoption of electric vehicles is the low availability of battery charging points in public places. According to a report by Grant Thornton-FICCI, India needs around 400,000 public charging stations to support 2 million electric vehicles by 2026. As of November 2021, there were only 452 charging stations. recharging as part of the FAME program. The Center further sanctioned 2,877 stations in 68 cities and 1,576 on nine highways and 16 highways.
States are also stepping up their efforts. For example, Delhi provides a grant of ??6,000 each to the first 30,000 candidates for installing EV chargers. Indian Oil Corporation plans to expand its charging stations from 448 now to 2,000 in one year, and add 8,000 in two years. Tata Power currently operates 878 public charging points for electric vehicles and is targeting 100,000 over the next 4 years. The charging of electric vehicles is expected to continue in 2022.
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