KPMG India and Confederation of Indian Industries (CII) have launched a report titled, ‘Shifting Gears: The evolving electric vehicle landscape in India’.
The report offers a holistic view of how EVs are emerging as a disruptive force, with OEMs making investments in product development and players across the ecosystem testing and discovering new innovative business models and use cases.
Since the running cost of EVs is much lower than ICE vehicles (one-tenth for 2W and 3W), said the report, a strong case emerges for a shift to EVs in B2B. Many large B2B players in e-commerce, grocery, food, courier delivery have been piloting EVs and some have moved into advanced stages of deployment. Battery swapping and Energy as Service are being deployed to reduce upfront investment, improve vehicle uptime and eliminate range anxiety etc.
Thus, it sees the entire EV ecosystem come together and make EV ownership with accelerated timelines a reality.
KPMG in India expects 25 to 35 per cent 2W penetration and 65 to 75 per cent in 3Ws by 2030. Four-wheeler passenger vehicle (PV) electrification is expected to follow, with 10 to 15 per cent penetration in the personal segment and 20 to 30 per cent in the commercial one by 2030. About 10 to 12 per cent of the overall market for buses is expected to be electrified by 2030
Innovative business models such as battery swapping have emerged and will become mainstreams to enable widespread EV adoption.
In line with ‘Make-in-India’ initiatives and global supply chain realignments, the Government is strongly pushing the localisation of production to achieve the twin objectives of self-reliance and job creation
To drive EV adoption, Original Equipment Manufacturers (OEMs) and the Government, both at state and Central levels, need to work collaboratively towards an integrated policy, creating a conducive ecosystem for India’s electric mobility vision, said the report.
Currently, only a few state EV policies provide guidelines and incentives on battery recycling. Given this, a coherent recycling policy is the need of the hour, added the report.
The report also highlights the Total cost of ownership (TCO) analysis for different vehicle segments, few models that have been introduced in the Indian market to boost the adoption of EVs, and how the B2B segment is likely to lead growth in the next few years on account of established use cases, fixed/ pre-defined routes and cost savings due to higher utilisation.
Mr Rohan Rao, Partner – Industrials and Automotive, KPMG in India, said, “Electric Vehicles (EVs) are on course to fulfill their promise as a game-changer for the automobile industry. Two-wheeler (2W) and Three-wheeler (3W) auto segments are likely to lead the adoption curve followed by e-buses and passenger taxis. Directionally several factors, including availability of charging infrastructure, robust financing ecosystem, reduced battery prices and increased customer awareness, are paving the way for new era of EV adoption.”
The Government, he said, is also pushing EV policy to address some of the adoption barriers. “The government has launched a Phased Manufacturing Programme under FAME-II through which it is pushing the indigenisation of parts. The Government has also outlined plans to set up a battery manufacturing plants in India Overall, there seems to be great promise in India’s EV story, as all the above factors come together to drive long-term growth”, said Mr Rao.
Mr Jeffry Jacob, Partner, Management Consulting – Industrials and Automotive, KPMG in India, said: “EVs are undoubtedly the way forward for sustainable mobility and is increasingly gaining traction across the world. In India, the charge is being led by 2W and 3W segments, followed by public transport and non-public passenger fleet. One of the biggest hurdles India currently faces is our limited ecosystem for EVs. Significant number of critical components still continues to be largely imported and the charging infrastructure is largely inadequate. However the industry and Government are proactively working to address these constraints and are taking steps in the right direction. Several leading states have released EV policies with clear focus on driving increased adoption through both demand and supply led incentives.”
Among the key gaps in the existing policy ecosystem and the recommendations offered by KPMG are: state EV policies could lay a greater focus on demand incentives that shall bring down the upfront cost differential; these polices could have certain targets for conversion of EVs, at a segment level or for a particular industry/use case; setting up of adequate charging infrastructure; EVs could be promoted by encouraging users to purchase/use EVs over ICE vehicles with measures such as increasing road tax/registration fees on ICE vehicles, the vehicle scrappage policy is expected to spur the adoption of EVs; formulation of clear policies on sustainable end-of-life and disposal practices for the EV industry and corporate average fuel economy (CAFE) norms to mandate automakers to have a certain percentage of their vehicle sales as electric.