The future of electric vehicles in India


Modern life demands transportation, but our usual ways of getting around pump out a significant amount of greenhouse gases—about 25% of them, in fact. Research shows that the transport industry is a major culprit in energy-related greenhouse gas emissions. This realization has spurred a growing interest in adopting electric vehicles (EVs) across Asian countries.

The shift to EVs isn't just a personal preference; it's a crucial move to align with national emission goals and the global climate target of limiting temperature rise to 1.5 degrees Celsius. Fortunately, approximately half of the states in India have implemented EV policies. These policies come with substantial benefits, such as financial subsidies on EV purchases, exemptions from road tax and vehicle registration fees, and lower interest rates on EV loans. Moreover, these policies extend to initiatives that encourage public transportation and last-mile delivery providers to adopt electric vehicles on a large scale.

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Looking ahead to 2030, the vision is clear: 30% of passenger cars, 70% of commercial vehicles, and 80% of two and three-wheelers on the roads will be electric. It's an ambitious goal, but major players in the automotive industry are driving the shift toward renewable energy through advanced auto electrification technologies.

Enter 3M, making waves with its 3M Forward program. This initiative showcases how large-scale, science-based innovations in materials science can propel society forward amidst three significant trends shaping our future. With an eye on the expanding EV market in India and a commitment to addressing associated challenges, 3M is rapidly advancing its EV solutions, as detailed in this piece.

## **The current state of electric vehicles in India**

The electric vehicle (EV) market has experienced remarkable growth over the past year. The sale of 999,949 EVs in CY2022 marks an impressive 210% year-over-year surge from the 322,871 units sold in CY2021. Notably, the two- and three-wheeler markets, often dubbed the "close to the bottom peaches" of the EV business, have emerged as the primary catalysts for this surge. These segments play a pivotal role in driving EV sales, given their affordability compared to electric passenger or commercial vehicles.

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The Economic Survey 2023 predicts a robust growth trajectory for India's domestic electric vehicle industry. The industry is expected to achieve an impressive compound annual growth rate (CAGR) of 94.4% from 2022 to 2030, with an estimated annual sales volume reaching 10 million units by the end of that period. Additionally, it is anticipated that by 2030, the electric automotive sector will be a significant contributor, generating 50 million direct and indirect jobs.

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## **Challenges to the adoption of electric vehicles in India**

The widespread adoption of electric vehicles in India faces several hurdles that demand attention. Foremost among these challenges is the insufficient charging infrastructure. Although the government has announced plans for charging stations nationwide, progress has been slow. The fear of running out of charge during a long journey remains a significant deterrent for potential buyers.

Another obstacle is the relatively high cost of electric vehicles. Despite a recent decrease in prices, they still outstrip their petrol or diesel counterparts, limiting accessibility for the average consumer.

Furthermore, the range of electric vehicles needs improvement, particularly for long-distance travel. While urban commuters may find this less problematic, it remains a significant concern for those covering substantial distances. Addressing these challenges is crucial for the broader acceptance of electric vehicles in the Indian market.

## **India sets ambitious targets**

As per Union Minister Nitin Gadkari, the Indian government intends to achieve the following EV mix in India by 2030:

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The Indian government is actively pursuing its ambitious electric vehicle (EV) targets through strategic policies and initiatives. The National Electric Mobility Mission Plan (NEMMP) is a comprehensive approach aimed at promoting widespread adoption of EVs in India, with a focus on reducing the country's dependence on crude oil.

To accelerate EV adoption, the government has implemented the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme, providing a framework for increased adoption rates in the coming years. In the 2023 budget, the Finance Minister of India announced a reduction in customs duty and taxes, specifically designed to boost domestic production of lithium-ion batteries, a critical component for powering electric vehicles.

Several state governments, including Assam, Telangana, Tamil Nadu, and Gujarat, have crafted attractive policies and programs to incentivize EV manufacturing within their jurisdictions.

These concerted efforts have attracted private players to enter the EV market, setting the stage for further adoption of electric vehicles in India. The success of these initiatives not only holds significance for India but also carries the potential for a positive global impact.

## **Environmental opportunities for India**

The shift towards electric vehicles (EVs) in India is poised to bring about a substantial positive impact on the environment, especially considering the current scenario where the transportation sector is a significant source of pollution. Taking New Delhi as a case in point, two- and three-wheelers alone contribute to 50% of the surface PM 2.5 levels, underscoring the urgency for cleaner alternatives.

India's transportation sector, responsible for approximately one-fifth of the country's total energy consumption, presents a key opportunity for transformation. The adoption of EVs can contribute significantly to environmental improvement in the following areas:

1. **Reducing Air Pollution:** Vehicular traffic contributes significantly to air pollution in India, causing 27% of total air pollution and resulting in 1.2 million annual deaths. The adoption of EVs can markedly decrease these negative impacts, offering a cleaner and healthier environment.
2. **Reducing Noise Pollution:** India faces challenges with noise pollution, especially in rapidly urbanizing areas. EVs, being inherently quieter without mechanical valves, gears, or fans found in internal combustion engine (ICE) vehicles, can contribute to a reduction in noise levels. This is crucial for improving the quality of life in urban settings.
3. **Improving Operational Efficiency:** The operational efficiency of EVs, with the ability to convert 60% of electrical energy from the grid compared to the 17-21% efficiency of petrol or diesel cars, presents a significant advantage. This shift not only enhances fuel production efficiency but also lowers operational costs for end-users, potentially driving increased demand for EVs.

In addition to these environmental benefits, the adoption of EVs in India opens up substantial economic opportunities for the country. The transition to electric mobility can stimulate job creation, boost innovation in the automotive sector, and contribute to India's broader economic growth. The positive ripple effects extend beyond environmental sustainability, making the move towards EVs a multi-faceted and impactful endeavor for India's future.

## **Growth of electric three-wheeler production in India**

The use of electric three-wheelers in India has increased rapidly, causing a 123% rise in manufacturing by Original Equipment Manufacturers (OEMs) in the first half of the year.

According to the Society Of Automobile Manufacturers (SIAM) stats from January to June 2023, 16,552 electric three-wheelers were made, compared to 7,522 in the same period in 2022.

This manufacturing boost is a response to a higher demand, with OEMs introducing new products with better features. Mahindra’s Last Mile Mobility (LMM) had a 14.6% market share and sold 36,816 electric three-wheelers in FY23, up from 17,522 in FY22.

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Bajaj Auto, having recently introduced its electric three-wheelers in some markets, is also experiencing increased demand.

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“Electric three-wheeler sales volume grew 78 per cent year-on-year and 7 per cent month-on-month. Electric vehicle penetration in three-wheelers was 55 per cent. Tamil Nadu and West Bengal saw the fastest electric three-wheeler month-on-month volume growth. We are still awaiting market leader Bajaj’s entry into the space, which we believe will be the next catalyst for the industry,” mentions a BNP Paribas report for June.Piaggio Vehicle, a subsidiary of the Italian automaker Piaggio & C. SpA, has seen a substantial increase in sales of its electric three-wheelers, reaching around 26,000 units since their introduction in 2019. This shows significant growth compared to the 12,000 units sold in the previous year, as reported by Amit Sagar, the company’s Executive Vice President of Commercial Vehicles.

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Expanding their electric vehicle offerings, the company has recently launched its first electric passenger three-wheeler, named the Ape E-city FX NE Max, in Tamil Nadu. Priced at Rs 3.46 lakh, this passenger vehicle is an addition to the existing lineup of cargo vehicles.

## **Growth of electric two-wheeler sales in India**

The electric two-wheeler market in India has shown remarkable growth, despite facing challenges. In FY23, sales figures reveal a notable uptick, with 7,26,976 high-speed e-scooters and 1,20,000 low-speed e-scooters finding buyers. Additionally, 50,000 e-cycles and 2,85,443 units of low-speed e-rickshaws were sold. The electric three-wheeler (e3W) segment saw 4,01,841 units sold, while electric four-wheelers (E4W/electric cars) reached 47,217 units. The electric bus (E-Bus) market reported sales of 1,904 units. The total electric two-wheeler sales for the fiscal year stood at an impressive 8,46,976 units.

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Comparatively, in FY22, the numbers were at 3,38,000 units, with 2,52,543 units for high-speed e-scooters and 75,457 units for low-speed e-scooters. However, it's worth noting that the growth rate in the high-speed electric two-wheeler segment slowed down in the latter part of the fiscal year. This slowdown resulted in annual estimates falling short by over a quarter (25 percent shortfall) as reported by research organizations and Niti Aayog. The initial estimates had pegged the figures at 10,00,863 units, indicating the impact of the deceleration in growth in this specific segment.

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## **The future of electric vehicles in India**

The future of transportation in India is showing promising signs of going electric despite challenges. The government has set an ambitious target of achieving a 30% electric vehicle replacement by 2030. Multiple manufacturers have also announced plans to introduce electric vehicles in the upcoming years, indicating a shift towards sustainable mobility.

A notable positive development is the increasing emphasis on renewable energy in India. With a target of reaching 175 GW of renewable energy capacity by 2022, and plans to escalate this to 450 GW by 2030, there is a concerted effort to reduce the carbon footprint associated with electric vehicles. This aligns with making electric transportation a more environmentally sustainable choice.

In the 2023–24 Union Budget, Finance Minister Nirmala Sitharaman allocated INR 35,000 crore for substantial capital expenditures aimed at transitioning to renewable energy and achieving net-zero objectives by 2070. The proposal includes scalability gap financing for Battery Energy Storage Systems with a capacity of 4,000 MWH. Existing government programs such as the Faster Adoption of Manufacturing of Electric Vehicles Scheme-II (FAME-II) and the Production Linked Incentive Scheme have been instrumental in supporting electric car manufacturers.

Furthermore, the discovery of 5.9 million tonnes of lithium reserves in Jammu and Kashmir is a game-changer for India's electric vehicle industry. Lithium is a crucial component in electric vehicle batteries, and India currently relies heavily on imports for its lithium needs. The newfound reserves are expected to substantially reduce dependence on imports, making electric vehicles more affordable and accessible to a broader population.

These collective efforts and developments indicate a growing momentum towards a greener and more sustainable future for transportation in India.


India's promising electric vehicle (EV) future, driven by environmental concerns and national goals, involves half the states implementing EV policies with incentives. The government targets 30% electric passenger cars, 70% commercial vehicles, and 80% two and three-wheelers by 2030. Despite challenges, initiatives like the National Electric Mobility Mission Plan and FAME scheme aim to boost EV production. This EV transition is expected to benefit the environment, aligning with global climate goals, and involves active participation from private players like 3M. The electric three-wheeler market has surged by 123%, with major players like Mahindra and Bajaj Auto experiencing growth. The electric two-wheeler market shows remarkable growth, supporting the government's ambitious 30% EV replacement goal by 2030. India's commitment is further evident through emphasis on renewable energy, lithium reserves discovery, and budget allocations.

The future of electric vehicles in India

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