India is assured that its new electrical car coverage measures will open up the market to extra world gamers, mentioned the nation’s secretary of the Division of Promotion of Business and Inside Commerce.
Final month, the federal government rolled out key initiatives geared toward bolstering the nation’s place in EV manufacturing.
“It includes concessional tariffs for restricted volumes of imports by world EV producers, linked to ironclad dedication by them to put money into India a minimal of $500 million,” Rajesh Kumar Singh advised CNBC’s Sri Jegarajah.
“And likewise meet very stiff localization targets of 25% by the third 12 months and 50% by the fifth 12 months,” he added. “It was meant for all world EV producers and home producers.”
Whereas a lot of the “buzz has been round Tesla,” Singh underscored the initiatives may even entice different international automakers, highlighting that Vietnam’s main EV maker “VinFast has already introduced its intent.”
“Whereas I do not wish to point out a number of the different corporations who’re , we’re very assured that a number of corporations can be making the most of this coverage.”
In February, VinFast broke floor on its built-in EV manufacturing facility in India’s southern state of Tamil Nadu. The corporate plans to initially make investments $500 million over 5 years, with a projected capability of 150,000 autos yearly, in response to the assertion.
Tesla CEO Elon Musk has mentioned he’s “extremely enthusiastic about the way forward for India.” However he not too long ago postponed a scheduled trip throughout which he was set to fulfill Prime Minister Narendra Modi, citing “heavy Tesla obligations” for why he could not come.
“The door is, clearly, very a lot open,” to Tesla mentioned Singh. As competitors in India’s EV sector stays restricted, the entry of main gamers like Tesla, will degree the taking part in subject, MG Motor India’s CEO Emeritus Rajeev Chaba advised CNBC.
Strong trajectory
“By 2030, EVs are expected to represent nearly one-third of India’s PV market, signaling a robust long-term growth trajectory in the country’s automotive sector,” said Counterpoint.
Modi aims to have 30% EV usage by the end of this decade, a target that Singh called realistic.
“For passenger cars, I would say, it will be more realistic to expect 15% to 20% by then,” he said. “But overall, if you look at all types of vehicles, including our commercial vehicles among three-wheelers and two-wheelers, certainly we will be hitting above 30%.”
When it comes to India’s two-wheelers and three-wheelers, EV penetration is strongly picking up, the secretary added.
“We already have one of the highest in the world — close to 50% — for three-wheelers. For two-wheelers, we are already at about 10%-12%,” he noted.
“In passenger vehicles, we have this lag — where the penetration so far is only about 2%, which is why we wanted to kickstart this process by creating a policy, which incentivizes manufacturers to come into India in larger numbers and bring in their latest models and technology.”
India overtook China in 2023 to become the biggest market for electric three-wheelers, with over 580,000 sales, the International Energy Agency said in its latest “Global EV Outlook” report.
The country is also the second-largest electric two-wheeler market globally, the report added, with sales in 2023 growing by 40% compared with 2022.
“The Indian electric 2W market is dominated by the five largest domestic manufacturers (Ola Electric, TVS Motor, Ather, Bajaj and Ampere), which accounted for more than 75% of sales,” IEA said.
Structural problems
Still, there are several structural challenges that need to be addressed to spur increased EV adoption, pointed out Bain & Company.
India significantly lags other countries on charging infrastructure, “with roughly 200+ EVs per commercial charging point in India, as compared to ~20 in the US and less than 10 in China,” Bain highlighted in a report.
“It is a challenge,” Singh acknowledged. “But investment in setting up the battery charging infrastructure is now underway in many of our larger cities, and even in some of the highways.”
“Our expectation is that the battery charging infrastructure will become quite ubiquitous in the next two to three years.”
The secretary also highlighted “range anxiety” — or the fear that EVs won’t have enough range to reach their destination — is another barrier that needs to be overcome.
“Range anxiety as an issue will, hopefully, not prevent the expansion” of the EV space and “demand among consumers for fully electric vehicles,” he said.