Summary
The automotive industry has changed dramatically with the move to electric vehicles (EVs), which is motivated by the pressing need to cut back on fossil fuels and greenhouse gas emissions. EVs have many benefits over conventional internal combustion engine (ICE) vehicles. They run on energy produced by fuel cells or rechargeable batteries. Notably, they have zero tailpipe emissions and are less expensive to operate, making them a desirable option for legislators and consumers. Furthermore, especially in crowded urban areas, their quieter functioning helps to lower noise and air pollution. This analysis outlines the current growth path of EV industries and existing policies to support this growth.
The first electric vehicle prototypes were created alongside the development of gasoline engines in the 19th century. However, the prevalence of ICE vehicles and battery technology constraints prevented EVs from becoming widely accepted. The performance and convenience of gasoline-powered cars dominated the electric vehicle market for many of the 20th century.
The late 20th century was a watershed for electric vehicles (EVs) due to developments in lithium-ion battery technology, heightened environmental consciousness, and pro-EV legislation. These advancements made EVs more feasible and consumer-friendly by enabling notable gains in battery efficiency, range, and charging infrastructure.
Businesses such as Tesla have been instrumental in transforming the electric vehicle market. In addition to capturing the premium EV market, Tesla has increased rivalry among established manufacturers by concentrating on high-performance electric vehicles and investing in charging infrastructure. The company's success has disproved the long-held belief that EVs are less capable than their gasoline-powered counterparts by proving that electric vehicles can provide both performance and sustainability.
Global EV Market
As of 2020, over 10 million electric vehicles were on the road worldwide, with battery-electric models propelling the market's growth. The worldwide EV market is dominated by various manufacturers, each helping to advance electric mobility. With distinct business plans and target markets, major competitors include Tesla (USA), BYD (China), Tata Motors (India), and Hyundai (South Korea).
 |
Number of Electrical Vehicles Sales Across World
(2019-2023) SOURCE: https://www.statista.com/outlook/mmo/electric-vehicles/worldwide#unit-sales |
Growth
Rate
The formula for calculating CAGR:
CAGR = [( Ending Value/Starting Value ) 1/Years]-1.
Starting Value: 2019-20
Ending Value: 2023-24
Years: 4
Here are the annual compound growth rates (CAGR) for Electric and Hybrid Vehicles over the 4 years (2019-20 to 2023-24):
Electric Vehicles: 53.60% per year
Hybrid Vehicles: 64.36% per year
Total: 56.57% per year
The
Indian EV Market
One of the main initiatives is the [1] Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme. It offers financial incentives to promote EV adoption and lessen reliance on fossil fuels. FAME II, the program's second phase, was launched in 2019 and increased funding for electric buses, two-wheelers, and charging infrastructure.
Notwithstanding the encouraging outlook, the Indian EV sector still confronts many obstacles. To ensure widespread acceptance, better battery technology must be[2] developed, a strong charging infrastructure must be established, and supportive laws must be put in place. The market must also address concerns about the source and disposal of battery raw materials, which may impact the environment.
 |
Number of Electrical Vehicles
Sales in India (2019-2023)
| SOURCE: https://www.smev.in/statistics |
Growth Rate
The formula for calculating CAGR:
CAGR = [( Ending Value/Starting Value ) 1/Years]-1.
For example: Starting Value: 2019-20, Ending Value: 2023-24, Years: 4
The annual compound growth rates (CAGR) for each category over the 4 years (2019-20 to 2023-24):
2 wheelers: 143.55% per year
3 wheelers: 45.01% per year
4 wheelers: 148.36% per year
Buses: 70.79% per year
Total: 76.36% per year
This shows that four-wheelers and two-wheelers experienced the highest growth rates, followed by buses and the overall total.
Policies Supporting India’s Transition to
Electric Vehicles (EVs)
The switch to electric vehicles (EVs) is a crucial
part of India's aggressive goals to cut pollution and greenhouse gas emissions. To facilitate the EV transition, the Indian government has implemented several measures to encourage the adoption of EVs, boost production, and construct the infrastructure required for a cleaner, more sustainable transportation system.
FAME Scheme
The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) program is a key component of India's EV policy framework. Introduced in 2015, the program uses subsidies and incentives to promote the use
of EVs and lessen dependency on fossil fuels. The second phase, FAME II, was
introduced in 2019, and financial incentives were increased to support charging
infrastructure and electric buses, two-wheelers, and three-wheelers.
The scheme allocates around ₹10,000 crore over three years and focuses primarily on supporting public and shared transport
electrification.
PLI Scheme for Advanced Chemistry Cells
(ACC)
The Production-Linked Incentive (PLI) Scheme for Advanced Chemistry Cells aims to increase EV battery production in India to decrease reliance on imported batteries. The program offers financial assistance to businesses that set up battery production plants, promoting cost-cutting and innovation in EV
battery manufacturing—two essentials for accessible and reasonably priced EVs.
PLI Scheme for Advanced Chemistry Cells
(ACC)
To increase EV accessibility, the Goods and Services Tax (GST) on EVs was lowered from 12% to 5%, while the GST on conventional vehicles remained at 28%. Furthermore, under Section 80EEB of the Income Tax Act, people can deduct up to ₹1.5 lakh from their income taxes for the interest on loans they take out to buy EVs. These incentives increase EV sales and directly reduce customer expenses.
Two-wheelers' dominance in the EV market highlights their affordability and
convenience for urban commuting.
The rapid growth of three-wheelers suggests their potential for commercial
applications like deliveries and public transportation.
The increasing popularity of four-wheelers indicates a shift towards electric
personal transportation.
The slower growth of buses could be attributed to factors like
higher upfront costs and infrastructure requirements.
Reasons
for the boom
Government
Incentives: The Indian government has implemented
various policies and subsidies to promote EV adoption and make it more
affordable for consumers.
Environmental Concerns: Growing awareness about air pollution and
climate change has driven demand for cleaner transportation options.
Technological Advancements: Battery technology, charging infrastructure, and vehicle design improvements have made EVs more practical and appealing.
Fuel Price Volatility: Rising fuel prices have made EVs a more cost-effective
choice in the long run.
CONCLUSION
To sum up, the emergence of electric vehicles is changing the transportation
industry by providing a sustainable substitute for conventional automobiles.
EVs are positioned to play a significant role in combating climate change and
promoting cleaner air thanks to their advantages for the environment, cost
reductions, and technological developments. Electric vehicles can
completely change the automobile industry if nations like India adopt electric
mobility through encouraging laws and programs. We can create a more
sustainable and environmentally friendly future for future generations by
encouraging creativity and teamwork.
https://www.bcg.com/publications/2024/how-electric-two-wheelers-are-rapidly-gaining-popularity
https://assets.kpmg.com/content/dam/kpmg/in/pdf/2020/10/electric-vehicle-mobility-ev-adoption.pdf]
By
&
Dr. Durairaj Kumarasamy, Associate Prof. and Head DoE, SBSS, MRIIRS
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