Vikas Gupta is the founder, CEO and CFO of e-Ashwa Automotive Private Limited. He has been instrumental in not only starting this company in an unexplored but high potential growth sector like electric vehicles but also responsible for the strong market leadership position which the company has achieved over the period of last several years. As the CEO and CFO of the company apart from its founder, Vikas oversees operations and finance of the company and works closely with all the other business heads of the company in order to strategise and drive growth.
As more EVs are sold, it will stimulate to bring down the TCO (Total cost of Ownership) even further, resulting in the start of a healthy cycle to buy more EVs.
The Indian EV industry has been on a tremendous growth path for the last 6 years from 2015-16 to 2019-20. The SMEV data shows that combined sales of all EVs (2W + 3W + 4W + others) has grown over 7 times in the said period. But as the pandemic hit hard post the said period, production and sales in all industries including the EV industry suffered for almost 1.5 years. However, as of today the fear of Corona is nearing at the end and markets are fully open, thanks to the mega vaccination drive of the government and the social distancing followed by the common public, all industries are fully functional and sales figures are also reaching pre
Covid levels.
EV industry post Covid
Auto industry, especially the personal vehicle segment and EVs have gained a good momentum post Covid due to the fact that people want to prefer a personal vehicle for social distance reasons that had emerged during Covid. As a result, sales of EVs have increased in the last few quarters. This is evident from the fact that high-speed electric two-wheelers (e-2Ws), which can run on the road beyond more than 25km/hour speed, have registered a whopping 425% growth in 2021 as compared to 2020.
This is indeed a positive sign and the industry may retain growth momentum due to following global and local factors.
Global Factors
Increasing oil prices
With the kind of geopolitical situation emerging in Eastern Europe, crude oil has already hit $123.9 per barrel on 8th of March. Though there is some easing out, analysts predict that it may remain high in the near future and uncertainties will prevail for quite some time. This is one of the major driving factors that will push people to opt for greener and economical electric vehicles.
Decreasing cost of Li-ion batteries
In a normal electric vehicle, usually the price of the battery pack constitutes 40% to 50% of the total cost of the vehicle. Though the price of lithium metal is increasing due to surge in demand,
the average price of battery packs has considerably reduced from $1,200 per kilowatt-hour (kWh) in 2010 to just $132/kWh in 2021, thanks to the scientific research in the domain. However, this is still well above the threshold of $100 at which the cost of EV and ICE would match. But engineers predict that the prices would come down soon pushing for mass adoption of EVs.
Government’s push
Another factor that propels the adoption is the policy level interventions by the sovereign governments of the countries. Across the globe, there is some kind of a collective push to drive the EV segment. In India too, the government, with a series of policy frameworks, had initiated a deliberate push towards transition from IC vehicles to EVs.
Local factors
NEMMP & FAME scheme
Initiated with FAME I in 2015, „The National Electric Mobility Mission Plan (NEMMP) 2020‟ had aimed to focus on four major areas – (i) Demand Creation, (ii) Technology Platform, (iii) Pilot Project and (iv) Charging Infrastructure with total outlay of Rs. 529 Crores in 4 years until 2019. Based on the response on phase one of the scheme, FAME II was launched on 1st April 2019 for an initial period of 3 years with a budget support of Rs. 1000 Crore which was subsequently extended for two more years.
Post corona, FAME II has been providing the necessary push for EV adoption. According to the government data, under the FAME-II scheme, demand incentive for e-2W is increased to Rs. 15,000/KWh from Rs. 10,000/KWh with an increase in cap from 20% to 40% of cost of vehicle to increase adoption of e-2W. This has resulted in an increase in sales of EVs primarily led by e 2W. As on 26th November, 2021, 1,66,835 EVs were sold of which 1,36,714 were e-2W.
Standardisation of charging infrastructure
Towards the end of last year, in a major development the government has framed the standards for charging infrastructure. This will provide a major fillip in rapid creation of the charging infrastructure across India. The standardisation has driven retail oil majors like Indian Oil to leverage their existing outlets for creating charging infrastructure. If this goes true, India will have a charging infra available across the length and breadth leading to adoption of EVs.
Standardisation in battery swapping
In another development, last year auto companies, primarily 2 wheelers, have agreed for a common battery specification to ensure smooth user experience in terms of battery charging.
Joining this bandwagon again are retail oil majors like HPCL who have the requisite strength to transform the EV landscape.
Changing consumer perception & availability of electricity
Lastly, the end consumers too are realising that switching to EVs have more benefits both health wise and environmentally. Further, as electricity supply has increased in the rural areas and is more predictable, EVs are being preferred in such areas.
Way forward
Having analysed above factors which favour the adoption of EVs in the coming days, we have sufficient base that the coming year will be a boon to the EV industry and there are chances that it may perform beyond predictions. As per a report published by the Society of Electric Vehicles Manufacturers, “Sales of total electric vehicles in India are expected to be around 10 Lakhs units this year, equal to what was sold collectively in the last 15 years, mainly riding on the good traction witnessed by electric two-wheelers”. Hence, as more EVs are sold, it will impact the cost to bring them down, resulting in the start of a healthy cycle to buy more EVs and we may see the coming year to be favourable towards EV.