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How augmenting EV adoption plugs in the gap of existing mobility?

Mobility plays a pivotal role in any country’s economic prosperity. But rapid urbanisation and burgeoning population have accelerated mobility needs and escalated travel demands, stimulating the demand for vehicles. The gaps in the public transport network and its vulnerability during the Covid-19 pandemic have further pushed people towards buying personal vehicles. However, the rising number of vehicles impacts air quality, adds to traffic congestion, and increases the country’s reliance on crude oil imports.

To plug in the gaps in existing mobility judiciously, the Indian government and consumers are increasingly adopting Electric Vehicles (EVs). During COP26 summit prime minister Narendra Modi pledged to reduce carbon emissions intensity 45% by 2030 and net zero by 2070 in India, augmenting the adoption of EVs seems to be the only way forward. Besides being a sustainable mobility solution, EVs can also play pivotal roles in the economy, from solving gaps in the public transport network to electrifying last mile connectivity.

Reasons for EV Adoption

Mobility Gaps

In a country like India, with an ever-increasing population, the gaps in mobility are rising exponentially. Unfortunately, the public transport network falls short of meeting the surging mobility demands. As the gap continues to widen, more people are relying on personal vehicles as their transport mode of choice. EVs offer a smart solution for solving mobility problems without adding to environmental pollution or traffic congestion. By introducing EVs in public and private transport, such as e-buses, e-rickshaws and e-bikes, India can plug in mobility gaps and increase affinity for shared mobility solutions.

Rising Costs

In light of the BS6 emission norms and the recent surge in fuel prices, the price tag of ICE (Internal Combustion Engine) vehicles has obviously increased. Since the global pandemic and subsequent supply chain disruptions, India’s automotive market has witnessed a high sensitivity towards costs. This is influencing consumers’ preference for cost-effective mobility solutions. According to a report by IVCA-EY- Industry Law Report India will cross 9 million EV units by 2027. Higher input costs and steep petrol prices are encouraging more consumers to ditch the pump for the plug.

Environment Consciousness

There is no denying that petrol and diesel cars add to pollution, but their contribution is not limited to just tailpipe emissions. In fact, the process of extracting oil, refining it into fuel, transporting it to gas stations and manufacturing ICE vehicles generates a large amount of air pollution. With tall carbon emission reduction targets glaring India in the eye, there is a collective and conscious move towards cleaner mobility solutions. Owing to the growing awareness of climate change and its potential calamities, Indian cities and automotive companies are encouraging the adoption of EVs.

Barriers to EV Adoption

Sparse Charging Network

India’s current charging station count is limited to approx. 1800, posing the greatest obstacle to mass adoption of EVs in the country. High operating costs, ambiguity in utilisation rates of charging stations and additional load on already distressed electricity discoms further exacerbate the hostile environment for operators. Consequently, the number of charging stations remains insufficient in India. However, policymakers are constantly taking initiatives to address the issue and providing regulatory support for creating charging infrastructure for EVs. According to a report by EY, the number of charging stations is expected to grow to 1L by 2027.

Range Anxiety

EV range anxiety refers to the fear of running out of power and not being able to find a charging station on a journey. Despite having more to do with psychology than the range or charging infrastructure of EVs, it continues to be a major roadblock in the greater EV adoption in India. With advancements in R&D and technology, the range for EVs has increased significantly in the last few years. Additionally, the nascent charging infrastructure in major Indian cities is taking away some of the range anxiety of EVs.

Lack of EV Batteries

Most EVs require lithium-ion batteries that use metals like lithium, magnesium, cobalt and nickel. A dearth of these metals in India has compelled the country to depend on imports to realise its EV manufacture and adoption dreams. An increase in imports further increases the procurement costs, thus making EVs expensive. Besides import costs, these batteries also cost the environment substantially due to air and soil contamination and inefficient recycling. However, some manufacturers are developing alternatives to lithium-ion batteries and over the years, other manufacturers are expected to join the bandwagon.

Key to Augmenting EV Adoption

Diverse Suitability

EVs can play a central role in developing a sustainable mobility solution by electrifying public transport, supplementing last mile connectivity and solving private mobility concerns. An electric fleet of buses and taxis can help plug the gaps in public transportation, whereas electric two-wheelers can extend the last mile delivery network. Additionally, innovative mobility solutions like e-bikes can perform well on both work commute and off-road terrain. In 2021, 330,00 units of EVs were registered in India, clocking a growth of 168 per cent as compared to 2020. This surge in sales was led by 2- and 3-wheelers, which accounted for 48 per cent and 47 per cent of the overall sales, respectively, followed by passenger vehicles at 4 per cent says a report by Indian Venture and Alternate Capital Association (IVCA) in collaboration with EY and IndusLaw.

Improved EV Proposition

Ultimately, the success of EVs in India depends on their overall cost economics. EVs may have higher acquisition costs but their running and maintenance costs are much lower compared to ICE vehicles. With constant improvements in cost of ownership, EV range and price competitiveness with ICE offerings, the next wave of EV adoption is likely to occur soon. The introduction of innovative business models such as battery leasing and rental, battery swapping and widespread availability of charging infrastructure is further making the EV proposition highly attractive.

Policy & Regulatory Frameworks

A supportive policy environment in India has continuously propelled manufacturing and investments in the EV market. The Faster Adoption and Manufacturing of Hybrid and EV (FAME) scheme has significantly boosted investments in the EV space. A report released by Arthur D. Little, a management consulting firm, said that India’s EV industry attracted around $6 billion in investments in 2021 and is expected to attract $20 billion by 2030. Additionally, Electric Vehicles are covered under Production Linked Incentive (PLI) scheme for Automobile and Auto Components, which was approved on 15th September 2021 with a budgetary outlay of Rs. 25,938 crores for a period of five years.

Closing Thoughts

Owing to rising incomes and urbanisation and driven by mobility gaps and environment consciousness, India is ripe for EV adoption. As India embarks on a journey to adopt EVs, government support, a collaboration of a range of ecosystem players and the crafting of new business models are counted on to be the key pillars for mass adoption. EV adoption caters to the value-conscious Indian consumer, the climate-conscious industrial and government bodies, as well as the disruptive ecosystem players looking to capitalise on innovation to challenge automobile incumbents. Ultimately, the mass adoption of EVs will play a pivotal role in plugging the gaps in existing mobility and driving India towards a sustainable future of mobility.

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Disclaimer

Views expressed above are the author’s own.

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