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India drives one-third of EV battery demand in emerging economies, led by E2Ws & E3Ws
India led the surge in electric vehicle (EV) battery demand among Emerging Markets and Developing Economies (EMDEs) outside China in 2023, accounting for one-third of the demand in these regions. This growth was driven by the increasing adoption of battery-powered vehicles, particularly in the two- and three-wheeler segments.
In 2023, EVs made up over 95% of battery demand in EMDEs outside China, well above the global average of 90%, with India playing a pivotal role. Notably, electric two- and three-wheelers (2/3-wheelers) contributed about 25% of EV battery demand in these regions, compared to just 3% in China and under 0.5% in the European Union and the United States. This is despite the significantly smaller battery sizes of 2/3-wheelers—ranging from 5 to over 40 times smaller than the average electric car battery, according to a report by the International Energy Agency.
India and Southeast Asia collectively sold over 2 million electric 2 and 3-wheelers in 2023, representing more than 90% of global sales outside China compared to electric car sales of under 400,000 in the same regions.
In India and Southeast Asia, half of the passenger kilometers traveled on roads were by two- and three-wheelers (2/3-wheelers) in 2023. While 2/3-wheelers and cars serve similar transportation needs, electrifying the entire fleet of 2/3-wheelers in India and Southeast Asia would require only 30% of the battery capacity needed to electrify their current car fleets, based on average regional battery sizes in 2023. Beyond environmental benefits, electrifying vehicles could also significantly reduce air pollution in major cities like Mumbai, improving public health, it pointed out.
In India, the emissions savings per battery electric vehicle (BEV) are lower compared to countries with cleaner power grids due to the higher emission intensity of its electricity generation. However, the savings are still substantial. In 2023, the life cycle emissions of a medium-size BEV (battery electric vehicle) in India were 20% lower than an equivalently sized internal combustion engine vehicle (ICEV), offering slightly more emissions savings than plug-in hybrid electric vehicles (PHEVs).
India is also progressing in its renewable energy transition. It plans to cut grid emissions significantly by 2035 when the country’s grid emissions intensity is projected to fall to 60% of current levels. This will enhance the environmental benefits of electrification in the coming years.
In parallel, the battery storage market remains in its nascent stage across EMDEs, with less than 1 GWh of storage capacity added in 2023. However, over half of this demand came from Southeast Asia, Africa, and India, with each region contributing about 15% of the total demand in the region. The high cost of capital in these regions—at least double that of advanced economies—remains a significant barrier to further investment in battery storage.
China continues to lead the global battery storage market, with demand soaring to 45 GWh in 2023, nearly tripling from the previous year. This surge is driven by China’s expanding renewable energy sector, as it installed more intermittent renewable capacity in 2023 than the rest of the world combined, it highlighted.
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Published on December 20, 2024
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