The State of the Indian Electric Vehicles Industry

The electric vehicle (EV) industry is gaining traction in India. Recent signs show rapid growth, but internal combustion engine (ICE) vehicles are holding on to their foothold. Some of this is due to consumer unfamiliarity. EVs are new and untested; ICE vehicles are familiar, and their quality is proven. But times are changing. New vendors are coming to market, and the Indian government is committing to getting more EVs on the road. What does the market look like today? To find out, GLG’s Alisha Chatterjee hosted a teleconference with Ashish Yakhmi, GLG Network Member and former Head of the Two-Wheeler Business at Piaggio. What follows is an edited and condensed excerpt from their conversation.

Can you give me an overview of the Indian electric vehicle industry?

The Indian EV industry is showing promise. New brands are launching, new companies are opening, and, most importantly, the government is providing a lot of support for EVs in terms of FAME subsidies that are helping the industry to grow at a good pace. These are early days, but as with any other industry, especially manufacturing and vehicle-related, it will typically take some time to build up. But at the pace EVs have grown so far, it’s quite encouraging.

In India, electric vehicles started their journey about six or seven years back and have picked up pace in the last couple of years. In May 2022, electric three-wheelers outsold internal combustion engine vehicles. “New age” companies are clearly entering the market and changing established industry dynamics. The ICE segment has traditionally been fueled by “old age” companies with traditional OEMs, engines, parts, etc.

We’re seeing similar trends across the world. Start-ups are entering this space. Of course, the typical OEMs that sell ICE vehicles are entering at a lower, slower pace, basically because they’ve been saddled with a lot of baggage as it relates to ICE vehicles, which they both sell and service.

Overall, the environmental benefits that electric vehicles provide help push the case for this category of automobiles. The Indian government is working toward 30% of vehicles on the road being electric by 2030, so there are good times ahead for EVs.

Can you tell me more about how the EV two- and three-wheel industry is faring? What is its current market penetration?

In the past two years, I’ve seen a quantum jump in two-wheelers and three-wheelers as a segment in the electric vehicle space. In 2019 there were only a handful of EV companies, which accounted for just a few thousand units combined. But in just the past 24 months or so, it’s become a 1.2 million to 1.3 million per-month industry. Electric vehicles now stand at about 3% to 3.5% market share or penetration.

It’s growing fast. By contrast, ICE vehicles are hardly able to get back to the numbers that they were selling in 2019. The pandemic probably had a lot to do with this. I think the biggest benefit for the two-wheelers was not just the increase in regular users but also the whole e-commerce segment, which has come up in a big way and is dependent on light, fast, efficient delivery vehicles.

Three-wheelers are perfectly adapted for the last-mile reach. As I said earlier, about 50% or 56% of the vehicles sold in the month of May 2022 were three-wheelers. That’s very encouraging. Electric three-wheelers are the only segment that has overtaken ICE vehicles because of the role typical auto rickshaw drivers, or the three-wheel goods carriers, play in the Indian economy. Electric vehicles give them a big jump in terms of what they’re able to achieve.

Can you talk about consumer behavior in terms of adoption rate, technology familiarity, and ease of access to switch to EV vehicles?

Basically, the consumer is very curious and positive about electric vehicles. But at the same time, some uncertainty remains. They want more information. The want to know if the quality is good. They want feedback from the early adopters. They want to see the vehicles on the road. Once the vehicles become visible, that’s the best reassurance and the best publicity for the manufacturers.

And then they’re waiting for the charging infrastructure. Today, a consumer is used to picking up a vehicle, the fuel is already there, or they go to fill up and then move ahead. The consumer now must really get used to the fact that they must ensure that batteries are charged. This mindset change will take some time.

On top of that, the cost of the vehicle is also a challenge. Unless more EV vehicles are sold, the costs won’t come down. And this is despite all the subsidies that exist in the market. But there’s a lot of noise in the market, new companies entering, the support from the government. And at the same time, we are seeing a good rise in numbers of electric vehicles, from a percentage point of view, and learning how they perform, but it’s still comparatively new.

All this will grow, but it will take about maybe three to six years by the time it really establishes as a way of life. We are seeing in all the new neighborhoods — the residential neighborhoods, for example — the charging station infrastructure become mandatory now. So in all the new housing developments in larger cities like Mumbai and Delhi, developers are trying to set up electric charging stations on each parking lot. So these moves will help but it will take some time.

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About Ashish Yakhmi

Ashish Yakhmi was Head, Two-Wheeler Business at Piaggio from 2015 to 2020. Prior to this, he was a consultant for multiple technology start-ups from 2013 to 2015, and before that he was the General Manager, Sales, and Marketing at Essar Global Holdings from 2011 to 2013. Ashish has a detailed and in-depth knowledge of the Indian electric vehicle space, including the charging infrastructure and consumer mindset.

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Questions Asked During the Teleconference:

• Can you give me an overview of the Indian electric vehicles industry?
• Can you tell me how the EV two- and three-wheelers industry is faring currently? What is its market penetration in the current age?
• Who are the main players in India in the two- and three-wheelers EV industry and what is their current market share?
• Can you tell me about the EV battery-swapping business model in India? How does the system work?
• Can you tell me about the latest policies in India regarding EV battery swapping?
• Can you talk about the consumer behavior in terms of adoption rate, technology familiarity, and ease of access to switch to EV vehicles?
• What other major challenges is the EV industry facing currently and what initiatives have been planned to overcome these?
• Can you tell me about the EV100 initiative to combat climate change issues in India? Which companies have joined this bandwagon to boost EV vehicles usage?
• What do you think is the industrial outlook for 2030 for the EV industry in India?