Insight - Fresh opportunities as electric vehicles power up in India

The Indian Government wants to accelerate the introduction of electric vehicles (EVs) as part of its clean energy policy. Policy initiatives will initially focus on two-wheeled vehicles, which are a major cause of urban air pollution.

India’s new EV ecosystem will create opportunities for Australian companies. These include:

  • advisory services in safety and regulation
  • collaborative research in EV technologies
  • recharging infrastructure.   

Austrade advisors in India can help you understand the emerging EV market in more detail. They can also help Australian organisations to craft a market-entry strategy.  To find out more please contact rahul.ranjan@austrade.gov.au

India’s new focus on electric vehicles

India is determined to reduce carbon emissions by 2030. The government signed the Paris Agreement 2016. Today the government is heavily promoting clean mobility initiatives to achieve its 2030 target. 

Almost all vehicles currently run on gasoline and diesel, and compressed natural gas (CNG). The gradual replacement of these conventional fuels will depend on:

  • increased investment in research and development (R&D)
  • new EV infrastructure
  • ensuring it makes commercial sense for consumers to spend a premium on EVs.

India's policy-making body, NITI Aayog, has drafted a national EV policy. This is the Zero Emission Vehicles: Towards a Policy Framework. It defines the scope for electric vehicles in India. It highlights specific characteristics and initiatives for the automotive sector.

Transitioning to EVs

The transition from 100 per cent dependence on internal combustion engines to EVs represents a huge challenge. But there’re are clear benefits for Indian governments, businesses and citizens, which include:

  • improved air quality, especially in major cities
  • reduced dependence on imported oil
  • lower greenhouse gas emissions that can offset industrial emissions
  • improved plant load factors (PLF).

The transition has begun, and EVs are gradually emerging onto Indian roads. Sales of electric-powered rickshaws already exceeded 600,000 in 2019.

Two-wheelers powering EV growth in India

Two-wheelers make up 79% of the private vehicle market in India. This means the success of an EV policy depends on the speed at which mopeds, scooters and motorcycles can be electrified.

There is an additional environmental incentive. The high levels of air pollution caused by two-wheelers makes EV a top government priority. This means the Indian Government has put the two-wheeler segment first on its target list.

Purchase cost is currently a major barrier to uptake. In India a conventional petroleum-powered scooter or motorcycle retails for A$650–850. An electric scooter, however, retails for as much as A$2,300.

High cost of lithium-ion batteries

The main reason for increased price is the high cost of lithium-ion batteries. This can be worth 30–50% of the manufacturing cost of an electric scooter – depending on battery capacity. Although most electric two-wheelers have battery storage of about 1–1.5 kWh, the range this provides is extremely limited.

To gain a 100km range, a scooter or motorbike requires a battery with 3 kWh of storage. This means the high cost of lithium-ion batteries is one of the biggest challenges facing EV scooter uptake in India.

Government initiatives

Driving the EV revolution is a daunting task. The Government of India recognises the challenges at multiple levels: at the federal level in terms of taxes and policy; and at state level in terms of infrastructure.

Initiatives are already under way. The Government of India has reduced the government sales tax (GST) on EVs from 12% to 5%. The GST on EV chargers has been reduced from 18% to 5%. According to an India Brand Equity Foundation (IBEF) report on vehicles in India, other initiatives include:

  • income tax deductions of A$3,126 on the interest paid on loans that are taken out to purchase EVs
  • government incubation centres that focus on EVs
  • the planned deployment of 5,645 electric buses across 65 cities
  • approval for Niti Aayog's proposal to offer A$140 million a year in subsidies to battery makers, starting in 2022.

India’s FAME scheme

One important scheme is called FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India). Launched in 2015, this initially provided subsidies worth A$190 million to EVs, including two and three-wheelers, hybrid and e-cars, and buses.

The expanded FAME II scheme was launched in April 2019. This includes funding worth A$2.02 billion – and can be used to incentivise EV purchases and support the rollout of charging infrastructure.

The number of vehicles supported under the FAME scheme increased from 5,197 in June 2015 to 192,451 in March 2018. Under FAME, 11 cities have been shortlisted for the introduction of EV public transport vehicles.

Challenges in the Indian EV Ecosystem

The principal challenges to introducing EV vehicles in India are:

    • reducing resistance among consumers, which means improving the value proposition
    • increasing public awareness around EVs and their benefits
    • reducing vehicle and battery costs
    • enhancing vehicle range and recharge times
    • increasing the number of charging and swapping stations
    • improving the availability of domestic battery supplies
    • managing battery usage and disposal post-use in EVs.

To address the challenges will require co-ordinated federal and state government action.  

India’s EV ecosystem

Several companies are working to introduce EVs in India. Some are already designing and testing vehicles. There is a clear focus on two- and three-wheelers.

Vehicle manufacturers

Energy operators

Battery & recycling

Chargers & motors

Ashok Leyland

Essel Green Mobility Limited

Indian Space Research Organization (ISRO)

Delta

Tata Motors

Sun-Mobility

Amara Raja Batteries Limited

ACME Group

Mahindra Electric

Bharat Petroleum Corporation Limited (BPCL)

Exide Industries Limited

Exicom

Eicher (VE Commercial)

National Thermal Power Corporation (NTPC)

Exicom Power Solutions

Consul Neowatt Power Solutions Private Limited

Bajaj Auto Limited

Power Grid Corporation of India Limited

Grintech

Compage Automation System Private Limited

Kinetic Green Energy and Power Solutions Limited

Kerala State Electricity Board Limited (KSEBL)

Sun-Mobility

Lohia Autos Limited

Hindustan Petroleum Corporation Limited (HPCL

Eon Electric Limited

Electrothern India Limited

Attero Recycling

Goenka Electric Motors Vehicles Private Limited

Hero ECO

Okinawa Autotech Private Limited

Ather Energy

Avon Cycles

COVID-19 impacts

The COVID-19 pandemic has directly impacted supply and demand in India’s auto industry. One immediate effect is an increased interest in diversification for automotive components, and decreasing reliance on China. There is likely to be public policy support for:

    • helping India to become self-sufficient in EV battery manufacturing
    • supporting the industry and start-ups that want to produce automotive components locally
    • ensuring that supply chains become less dependent on China
    • switching component supplies to Japan, Korea and Taiwan.

In June 2020, Austrade advisors attended the ‘Electric Vehicle Virtual Summit’, along with auto professionals in India. This was organised by The Economic Times Group. Observations from the summit included: 

    • Electric vehicles have increased popular support. During lockdowns, city residents experienced clean air to an unprecedented degree. Millions of citizens across northern India could see the Himalayas from their homes for the first time. This has altered public attitudes to pollution.  
    • Automotive experts in India believe that EV penetration will commence with two- and three-wheeled vehicles and state-owned buses.  
    • App-based two wheelers and self-drive vehicles may see a spike in demand for long term rentals, especially in tier II and tier III Indian cities, where there is insufficient public transport.
    • Private equity firms – including Tamasek, Blackstone, Goldman Sachs and Samara Capital – are actively exploring investment opportunities across India’s automotive component industry.
    • Industry experts believe that auto-component companies are looking to diversify supply chains that are currently dependent on China – especially for EVs.  

Opportunities for Australian Businesses

The rapidly changing EV ecosystem in India creates new opportunities for Australian companies. One recent infrastructure success is Tritium Pty Limited (Tritium). Tata AutoComp Systems of Pune – which is one of the country's leading automotive and mobility component suppliers – is partnering with Tritium to supply direct current (DC) chargers for electric vehicles.

Tritium's Veefil-RT DC fast chargers are capable of charging a range of EVs much faster than other chargers. This includes two-wheelers, passenger and commercial vehicles.

There are opportunities for Australian companies in three main areas:

  • Advisory services. Australian organisations are well-placed to offer advisory services. This is because Australia is well recognised for its safety standards and road quality, and our regulatory frameworks.
  • Collaborative research. Australia has an advanced and well-connected auto R&D, technology, and university ecosystem. This creates opportunities for collaborative technology research.
  • Vehicle charging. Partly owing to Tritium, Australia has globally competitive expertise in EV charging.

Areas

Potential Business Opportunities

Advisory

  • Best practice in regulation and standards
  • Vehicle testing
  • Research and development of future mobility
  • Public-private partnership models
  • Industry-government-academia collaboration

Electric Vehicle Technology

  • Electric vehicle components
  • Batteries
  • Battery chargers
  • Energy management
  • Software and application development
  • Power electronics and power integration
  • Alternative sources for batteries – including lithium batteries
  • Smart networks
  • Advanced materials to increase efficiency and reduce vehicle weight

Electric Vehicle Charging

  • Smart chargers
  • Charging infrastructure services
  • Cloud-based solutions
  • Grid management and power storage

How Austrade can help

Austrade can help Australian businesses craft a market-entry strategy for India’s EV ecosystem. Austrade initiated an 'Electric Mobility delegation to India' in November 2019, which incorporated the major cities of Chennai, Pune and Delhi. This delegation explored technological links and collaboration opportunities with Indian corporates and researchers in the field of electric mobility.

The electric mobility delegation was also part of the Australia–India Business Exchange program. This was a multi-month program organised by the Australian Government to deepen Australia's trade, investment, education and tourism relations with India (any valuable links to resources?)

For more information on EV opportunities, please contact:

Rahul Ranjan:  Investment Manager (South Asia): rahul.ranjan@austrade.gov.au