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India Electric Car Market Reviewed in Recent Study 2021 Research Report Forecast Estimation 2025

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“21 of the world’s 30 cities with the worst air pollution are in India”, says the headline of a February 2020 article published on the website of CNN. This is not an exaggeration, as an air quality index (AQI) in the mid-200s is common in Delhi, Mumbai, Bangalore, and other metropolises in the country. Considering that the transportation industry plays a major role in the emission of carbon dioxide (CO2) and other greenhouse gases (GHG), the government is now promoting electric vehicles (EV), by offering purchase subsidies and bearing a major part of the research and development (R&D) expenditure.

As per P&S Intelligence, government support will propel the Indian electric car market from $71.1 million in 2017 to $707.4 million by 2025, at a massive 34.5% CAGR between 2018 and 2025. In this regard, the FAME India scheme, launched in 2014 with an initial investment of INR 795 crore, which was later revised to INR 895 crore, is the most-important step. In 2019, the second phase of the scheme was launched with a funding of INR 10,000 crore, which will be spent on subsidizing electric vehicles and helping companies with R&D for cost-effective electric propulsion.

Upon the launch of the scheme at the central level, many states, including Karnataka, Kerala, Maharashtra, Andhra Pradesh, Uttarakhand, and Telangana, have taken their own initiatives to promote clean mobility. Similarly, in 2017, the NITI Ayog launched a programmed to install electric vehicle supply equipment (EVSE), or charging stations, on the route connecting Indira Gandhi International Airport to South Delhi and Noida. As per the initiative, 135 charging stations, including 89 AC slow chargers and 46 DC fast chargers will be erected at 55 places along the route.

Has the Reduced Battery Prices Facilitated Adoption of Electric Cars in India?

Apart from directly promoting EVs, the Indian thinktank has also implemented the Bharat Stage VI (BSVI) emission norms, which mandate a cleaner fuel and accordingly modified internal combustion engine (ICE). This has made conventional cars costlier for the masses, which is why many are expected to buy electric cars in the years to come. In addition, though EVs are currently more expensive than conventional automobiles on account of the high battery cost, the latter is coming down now, rapidly. Between 2010 and 2017, it dropped by almost 80%, from $1,000 per kilowatt-hour (kWh) to $160 per kWh, which, by 2025, might reach merely $100 per kWh.

Already, electric cars in India are being used by government organizations, shared mobility providers, private car fleet owners, personal users, and corporate transportation service providers. Among these, such vehicles have found the widest usage among individuals till now, on account of their declining prices and increasing disposable income of residents. In the coming years, the penetration of electric cars is expected to increase the fastest among Indian shared mobility providers, as a result of the extensive usage of public transportation services, which leads to enormous amounts of GHG emissions.

The division is further expected to dominate the market during the forecast period, as the government of India is offering the highest subsidies in the purchase of BEVs. In addition to this, the falling battery price, increased availability of these vehicles, and their lower upfront cost are further resulting in the growth of the category. In terms of battery, the market is majorly categorized into lithium-nickel-cobalt-aluminum oxide (Li-NMC) and lithium-iron-phosphate (LFP).

Between these two, the LFP category accounted for the largest share of the Indian electric car market in 2017, contributing more than 65% sales volumes, according to a report by P&S Intelligence. This can be ascribed to the various benefits offered by these batteries such as thermal stability and safety levels, high current rating, and long cycle life. Maharashtra dominated the market 2017, because of favorable government policies in the state.

Hence, the demand for electric cars in India is increasing due to the surging air pollution levels and declining battery prices.

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