Should India achieve its 2030 electric vehicle ambition and targets, it might present a market opportunity worth nearly $206 billion (Rs 14,42,000 crore) within the course of this decade, says an independent study released today by the CEEW Centre for Energy Finance (CEEW-CEF). The study also estimates a cumulative investment need of over $180 billion (Rs 12,50,000 crore) in vehicle production and charging infrastructure until 2030 to satisfy India’s EV ambition.
While India is yet to officially spell out its electrification targets for 2030, the aspiration as stipulated by NITI Aayog-government’s primary think factory, states that 70 per cent of all commercial cars, 30 per cent of personal cars, 40 per cent of buses, and 80 per cent of two-wheeler (2W) and three-wheeler (3W) sales would be electric by the top of this new decade.
As a result, the CEEW-CEF study says cumulative EV sales altogether vehicle segments would jump to over 100 million units by FY30 – 200 times its current market size of just half 1,000,000 as on March 2020.
“Availability and affordability of capital for OEMs, battery manufacturers, charge point operators, and end consumers would be key to determining the pace, efficiency and price of India’s transition to electric vehicles,” says Vaibhav Pratap Singh, Senior Analyst at CEEW-CEF and therefore the lead author of the report. “Consistent policy support would even be critical. The recent announcements by the govt to line up EV kiosks across 69,000 petrol stations within the country and permit sales and registration of EVs without batteries can provide a boost to the world .”
The study estimates that realising this ambition would require an estimated annual battery capacity of 158 GWh by FY30, which provides a huge market opportunity for domestic manufacturers. albeit 50 per cent of the battery manufacturing capacity were indigenous, investments would amount to the maximum amount as $6.1 billion (Rs 42,900 crore) by FY30. Further, the cumulative investments required would exceed $12.3 billion (Rs 85,900 crore) just in case of 100 per cent indigenisation of battery manufacturing. The recently approved production-linked incentive (PLI) scheme for the car and battery manufacturing sectors could help enable the proper ecosystem for indigenisation and job creation within the EV sector.
Another big opportunity would be within the area of charging infrastructure. India would wish a network of over 2.9 million public charging points by FY30, beyond the in-home charging points, says the study. this is able to require an investment of up to $ 2.9 billion (~ Rs 20,600 crore) until 2030. Currently, there are only about 1,800 public charging points across the country.
Similar opportunities exist within the auto loan market too. consistent with the study, if 50 per cent of the EV upfront costs – $103 billion (Rs 7,21,000 crore) – required through FY21-FY30 were to be financed through debt, the banking sector would need to quite triple its current advances of $31 billion (Rs 2,17,000 crore) towards vehicle loans within the next 10 years. The study highlights that distributing all the upfront costs also as operating costs (including fuel, maintenance, and insurance) into equal annual costs – away called annualization – would help navigate the challenge of the high upfront purchase cost. the answer could help create a diary of performance and repayments and thus help with the creation of a vibrant loan marketplace for EVs.
In addition, it recommends the event of policies around battery reuse, recycling, and leasing to assist bring down the high upfront cost of EVs. To encourage uptake of EVs, it involves creating state EV policies which combine incentives for EVs with disincentives for combustion engine (ICE) vehicles.