The electric vehicles market may represent Rs.500 billion (Rs.50,000 crore) opportunity in India by 2025, according to a report by Avendus Capital. Two and three-wheelers will lead the electrification movement.
Launching the report, Director and Head of Avendus Capital Koushik Bhattacharyya said: “Today, EVs make economic sense across multiple use cases. The inevitability of the transition to EVs is accepted by the world. But we believe that we are moving quickly towards a mobility regime where EVs become mainstream.”
The first part of the report deals with the technical aspect of understanding electric vehicles by laying down all the important blocks – from fundamental differences vs ICE to key components to a deep dive into battery technology –, and concludes with an analysis of key global markets.
The second part of the report maps the EV opportunity in the Indian context and presents the current state of the industry, including an elaborate total cost of ownership analysis and EV penetration rates for different use cases of EVs in India.
A detailed analysis in the report has revealed that the Total Cost of Ownership (TCO) in case of low and medium-speed electric two-wheelers, e-autos /e-ricks and commercial applications of four-wheelers (4Ws), is already lower than their counterpart of ICE vehicles. For high-speed two-wheeler EVs and other use cases such as retail 4Ws, CVs, the TCO will become favourable as the battery prices drop further.
“India represents the fourth largest automobile market in the world and the second-largest two-wheeler market with 20 million units. It is also a country with massive dependency on oil imports, with a US $ 112 billion oil import bill in the last fiscal. Pollution in many Indian cities has reached alarming levels. All these factors combined make a strong case for EV adoption in India,”Mr. Bhattacharyya added.
“Two and three-wheelers will lead the electrification movement in the country in the medium term. We expect 9 per cent penetration by 2025 in the two-wheeler segment. With the right macro environment, the number can further go up to 16 per cent. It is expected that this segment will grow to be INR 120 billion by 2025. E-rickshaw has also emerged as a large market in India in a very short time. A large part of this market is still unorganised and based on lead acid batteries. However, this market is expected to rapidly shift to Li-ion and by 2025, 40 per cent of the e-Rickshaw market is expected to be Li-ion based,” he said.
“E-auto makes economic sense on a TCO basis. We expect to see intensive action in this space going forward. We expect 20 per cent EV penetration in the E-Auto category by 2025. We expect this segment to be INR 40 billion by 2025. In the medium term, we expect the EV adoption in the four-wheeler category to stay limited to commercial/ fleet applications. The overall penetration in the e-4Ws segment is expected to be 2 per cent. With the right macro environment, the number could go up to 5 per cent. We also expect this segment to be Rs.100 billion by 2025,” said Ankit Singhal, Vice-President, Avendus Capital.
On the commercial vehicle side, E-buses are expected to lead the category. The regulatory push will drive this category, rather than TCO. “We expect EV adoption in the bus category to be 13 per cent by 2025. We expect this segment to be INR 60 billion by 2025. Light Commercial Vehicles ( less than 3.5 tonnes) in the EV category also make TCO sense and we forecast about 4 per cent EV adoption in this segment by 2025, translating into an INR 15 billion market opportunity,” said Mr. Singhal.