India Electric Car Market Overview
The Indian electric car market size was valued at $71.1 million in 2017 and is projected to reach $707.4 million by 2025, witnessing a CAGR of 34.5% during the forecast period. Government schemes and subsidies are playing a major role in the growth of the market. In addition, the growing environmental concerns owing to high pollution levels in major cities of the country are also positively affecting the market growth.
INDIA ELECTRIC CAR MARKET, BY END-USER, UNITS (2013-2025)
Based on the technology, the Indian electric car market has been categorized into battery electric vehicle (BEV), plug-in hybrid electric vehicle (PHEV), and hybrid electric vehicle (HEV). BEV category held the largest share in the Indian market, contributing over 70% sales volume in 2017. During the forecast period, the BEV category is poised to continue dominating its position in the market in terms of both volume and value, owing to the highest subsidies offered by the government on the purchase of BEVs as compared to PHEVs and HEVs. In addition, the availability of considerable BEVs model, falling battery price, and lower upfront cost are expected to benefit the market during the forecast period.
On the basis of battery, the Indian electric car market has been classified into Lithium-Iron-Phosphate (LFP), Lithium–Nickel–Manganese Cobalt Oxide (Li-NMC), and others. The “others” category includes other Li-ion based batteries, such as Lithium–Titanate oxide (LTO) battery, Lithium–Nickel–Cobalt–Aluminum oxide (NCA) battery, nickel–metal hydride (NiMH) battery, and lead acid battery. LFP battery-based electric car was the largest category in the market, contributing over 65% sales volume in 2017, owing to the benefits such as high current rating, thermal stability and safety levels, and long cycle life.
Maharashtra had the highest sales volume in 2017 in the Indian electric car market. The state is expected to continue being the leading market in the country for electric cars during the forecast period, owing to the state government’s Electric Vehicle Policy 2018 to help electric vehicle market grow by supporting electric vehicle manufacturing, developing charging infrastructure, and offering subsidies to customers on the purchase of these vehicles. The state government announced subsidies for electric cars, amounting up to $1,550 (INR 100,000) per vehicle.
India Electric Car Market Dynamics
On the Environmental Pollution Index (EPI) 2018, India is among the bottom five countries in the environmental health category and ranked 178 out of 180 as far as air quality is concerned. India’s CO2 emissions increased by an estimated 4.6% in 2017. The ultra-fine particulate matter (PM2.5), emitted by fuel-based vehicles, are harmful. Their concentration in the air have increased over the past decades leading to around 1,640,000 deaths annually in India. To reduce the air pollution, government has decided to shift from conventional fuel-based vehicles to electric vehicles in addition to implementing several stringent norms.
India is currently following Bharat Stage IV (BS IV) norms and would be moving to BS VI emission standard by 2020, skipping BS V. The government has decided to go directly from BS IV to BS VI fuel standards due to environmental degradation, growing pollution levels, and health hazards caused by vehicular pollution. This is a step toward a more sustainable and cleaner environment. As a result, reduction in the usage of conventional fuel-based vehicles is expected, thus increasing the demand for electric vehicles. With BS VI coming into effect, India would come at parity in automotive market with the U.S., and other developed European countries across the globe. Such initiatives are likely to spur the growth of the Indian electric car market.
Lack of adequate number of charging stations is one of the majors restrain spotted in the Indian electric car market. The charging infrastructure is the most decisive factor for electric car sales in the country. The limited or inadequate availability of charging stations, coupled with lack of adequate financial schemes for the growth of such infrastructure, hinders the adoption of electric cars by customers. In addition, the technological challenges such as limited electric range and long charging time are also expected to affect the adoption of electric car in the country.
Public transport systems of India are among the most heavily used across the world. Therefore, shared electric mobility has an opportunity to gain popularity in the Indian electric car market by meeting the increasing need for transport systems. Mobility systems are experiencing transformation due to increasing connectivity, new business models, and steeply falling technology costs. Many business models are offering shared electric mobility solutions, with the notable ones being Ola Cabs and Uber.
For instance, in 2017, Ola along with Mahindra & Mahindra launched a programme to build an electric mass mobility ecosystem in Nagpur, Maharashtra. Over 100 of Mahindra’s e20 plus vehicles have already been availed by the company. It is also planning to source vehicles for its fleet from other original equipment manufacturers (OEMs) including BYD Automobile Company Ltd. and TATA Motors Ltd. Also, Uber India entered into a partnership with Mahindra & Mahindra Ltd. to deploy electric vehicles, beginning with a few hundred vehicles, in Hyderabad and Delhi. Thus, the growing usage of electric cars in shared mobility services offers a lucrative opportunity in the Indian electric car market.
India Electric Car Market Competitive Landscape
Currently, the Indian electric car market is highly consolidated and is dominated by few players. Mahindra Electric Mobility Ltd. is the only manufacturer of BEVs and leads the market in the country. Other players such as Toyota Kirloskar Motor Pvt. Ltd., BMW AG, Volvo Car Corporation, and Honda Motor Co. Ltd. are offering HEV models in the market. However, with the Indian government taking initiatives to boost the market growth through favorable policies and incentives to support the adoption of electric vehicles, other automotive players have ventured into the Indian electric car industry. Furthermore, with the advent of established automotive manufacturers, such as Tata Motors Ltd., Hyundai Motor Company, and Honda Motor Co. Ltd., the competition is expected to intensify during the forecast period.