The electric vehicle (EV) industry in India has undergone significant technological advancements over the past few years, driven by the rise of electric two-wheelers (e2Ws), eBuses, electric commercial vehicles (eCVs), and electric four-wheelers (e4Ws). An increased consumer awareness and a focus on localisation have propelled the industry’s growth, says Prajyot Sathe, Associate Director, Mobility – Electric Vehicles,  Frost & Sullivan India.

The EV industry in India has been growing over the last five years in all segments, led by electric two wheelers (e2Ws), followed by eBuses, electric commercial vehicles (eCVs) and electric four-wheelers  (e4Ws). Areas which have seen significant technological advances include batteries, electric motors,  power electronics, and charging technology which are applicable to all vehicle segments. In terms of  

battery development, e2Ws and e3Ws use nickel-metal hydride (NiMh) batteries which have transformed completely over the years. Accordingly, all e2Ws and e3Ws currently use lithium-ion  batteries with a capacity range of between 2-3kWh. In terms of e4Ws and eBuses, most OEMs initially adopted Li-ion battery technology but have since shifted to lithium iron phosphate (LFP) batteries due to their superior cost and efficiency profile. Another major factor which has helped the  market gain momentum is rising consumer awareness about EV technology in terms of use cases and enhanced total cost of ownership. Range limitations, high acquisition costs, and inadequate  charging infrastructure has meant that, at present, most EV buyers tend to use EVs only as their  second car. 

The industry has been trying to establish localised supply chains with up to 20-30% component  localisation having been achieved mainly for e4Ws. Localised component production is likely to  increase to nearly 50-60% by the end of 2030. The trends will be the highest for components  such as power and control wiring harness, along with connectors, AC charging inlets, DC-DC  convertors, miniature circuit breakers (MCBs), circuit breakers, electric safety devices (power  electronics), electric compressors, traction motors and controllers. Local battery production will only  reach around 50% by 2030. 

Manufacturing costs are a critical factor for EV OEMs, and matching the cost competitiveness of  China will pose a huge challenge for Indian manufacturers. This will continue to be a  challenge for the next 10-15 years at least. 

In terms of charging infrastructure, relatively slow charging infrastructure development is a hurdle to  market development. Acquiring land banks to optimally position charging stations in cities has  constituted a major bottleneck that the government has failed to address to date. 

Ambiguity vis a vis central and state policies and incentives for EVs presents another challenge for  industry stakeholders. 

EV efficiency also suffers from the inability of the supporting component ecosystem to keep pace. For  instance, 100% localisation will be difficult, if not impossible, to achieve in India as the country is  dependent on imports of key rare earth materials used in battery manufacturing. Capacity limitations  both in terms of domestic battery manufacturing as well as semiconductor and power electronics  manufacturing will further impact the Indian EV industry. This will be aggravated by the slow pace of  development of advanced EV technologies like SiC, 800V, wireless battery management, and vehicle  to grid technology, among others. 

On September 15, 2021, the government approved the Production Linked Incentive (PLI) Scheme for  the automotive sector with a budgetary outlay of ?259.38 billion to support  domestic vehicle manufacturing. EVs are covered under this PLI scheme. The scheme has two  components viz. the Champion OEM incentive scheme and the Component Champion incentive  scheme. A total of 95 applicants have been approved under the PLI scheme. The Ministry of Heavy  Industries (MHI) had earlier approved 20 applicants, along with their 12 subsidiaries, for the  Champion OEM incentive scheme, subsequently approving 75 applicants, along with their 56  subsidiaries under the Component Champion incentive scheme. Two auto OEM companies were  approved for both parts of the scheme. The forthcoming Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) Scheme III is set to be mainly an extension of the ongoing  FAME II and will focus on component localisation as well as charging infrastructure development. 

Over 120,000 passenger EVs are likely to be sold in 2024, which will drive EV penetration to 3-4%. OEMs such as Tata Motors, SAIC, and Mahindra & Mahindra will continue to lead the market. BYD  and Stellantis, in addition to other foreign OEMs, have been trying to gain a foothold in the Indian  market and it will be interesting to see how the competitive landscape evolves in the next 4-5 years.  Demand in the domestic market will be good to absorb both E2Ws with an anticipated penetration rate of 50% in the scooter segment by 2030, E3Ws with an expected 60% and E4W with 12-15% penetration rate by 2030. Besides this, OEMs will target traditional export markets in Africa and Latin  America.