Companies Expect a Phenomenal Year for Electric Vehicles in 2021_ Industry Reacts

The manufacturing and sales activity were impacted by COVID-19 in the Electric Vehicle (EV) segment in India in the first half of 2020 due to a lengthy lockdown and exodus of the workforce from the cities.

However, 2020 was remarkable in terms of the funding the EV segment received.

Both central and state governments have put in place policies to support the industry and EV-users alike.  At least two states – Delhi and Telangana – have announced exemption of EVs from road tax. The Ministry of Road Transport and Highway (MORTH) has allowed states to register and sell EVs without pre-fitted batteries. The move is expected to lead to broader adoption of EVs in the country.

In the previous financial year (FY) 2019-2020, the sale of EVs in the country increased by 20%. According to the Society of Manufacturers of Electric Vehicles, 156,000 EVs were sold in FY 2019-20.


Mercom spoke to several industry stakeholders to discuss the industry outlook for 2021.

Outlook:

Anmol Jaggi, Co-founder and Chief Executive Officer (CEO) of BluSmart, an electric ride-hailing platform, expects 2021 to be an exciting year for the EV segment with more charging stations coming up across India.

“The difference in the prices of internal combustion engines (ICE) and EVs is leveling out. Since our company started, EV prices have dropped by 30-40%, and we hope that their use will double in the coming years. We have a fleet of 400 EV cars right now, and we plan to expand it to over 1,000 cars by mid-2021. For now, our market focus remains on the Delhi National Capital Region (NCR), which has a population of roughly 40 million people,” he said.

Amit Gupta, CEO, and Co-founder of Yulu, a Bengaluru-based micro-mobility service provider, said electric mobility as a concept would get much more traction in the coming years. “With the support of favorable government policies and a drop in lithium-ion battery prices, the segment will witness high growth soon. Yulu aims to increase its fleet of electric two-wheelers (E-2W) five to seven times in the coming year across four cities. It may also launch its service in another two cities, “he said.

Nischal Chaudhary, Founder and Director of BattRE, echoed similar views. He said, “Next year, the segment will witness much higher growth, and the sales of electric vehicles can go up to more than 250,000. The shift of ride-hailing companies like Bounce and others towards EVs will help increase EV sales in upcoming years. The entry of manufacturers like Bajaj and TVS in the electric mobility sector will provide credibility to the overall ecosystem of the sector.”

According to Naveen Munjal, Managing Director, Hero Electric, the EV sector will get a big push as more people will take to electric mobility as personal means of transport to curb pollution. “Over the last ten years, battery prices have dropped around 85%, making EVs far more affordable. They are cheaper to operate and maintain compared to internal combustion engine vehicles. To support EVs’ rapid adoption, we have installed 750 charging stations, and by March 2021, we will install 1500 charging stations. We aim to install around 20,000 charging stations in the next two years.”

Kavan Raval, Strategic Sales and Partnership, Earth Energy EV, said the EV market would continue to grow with the constant growth in charging infrastructure. “In 2021, things will stabilize, and the segment will pick up the pace. We are aiming to launch three electric two-wheelers and one commercial vehicle in January 2021.”

Pratik Gupta, Founder of Strom Motors, said mobility solutions like e-rickshaws, scooters, and low-speed vehicles had done phenomenally well in the last two years. “Overall, the segment’s growth momentum slowed due to COVID-19. We laid the groundwork in 2020 to start putting cars on the road by the end of 2021.

Saurav Kumar, Founder, and CEO of Euler Motors, said EVs are set to play a larger role as consumers and fleet owners realize their economic and ecological benefits. “We feel that two and three-wheelers will drive a robust electric vehicle demand trend in the next two years. As fuel prices soar and air pollution levels are under constant review, EVs will continue to be in the spotlight, especially in the commercial segment,” he said.

Industry’s expectations from the government

Anmol Jaggi is happy with the government’s incentives to drive EV growth. “As of now, the government is doing all it can to endorse electric mobility, including a drop in Goods and Services Tax (GST) from 18% to 5%. When it comes to the charging infrastructure, the tariff is competitive, especially in Delhi, at ₹4.5 (~$0.061) per unit.

Munjal said the FAME-II program gave a big boost to the EV sector. He suggested that the government subsidize the first 2 million EVs heavily to attract users. The subsidies can be phased out once the EV segment gets enough traction, he said.

The central government has an outlay of ₹5 billion (~$70.3 million) for the FAME -II program to propel EV adoption. With a total budget of ₹100 billion ($1.41 billion), the program is being deployed over three years from April 1, 2019.

Nischal Chaudhary pointed out that over 90% of EVs are low-speed vehicles, but they get no government support. “Only high-speed vehicles are eligible for government subsidies, which is around 10% of the overall market. We can look at over 100% growth if the government provides incentives for low-speed EVs,” he said. He cited the example of Gujarat, which witnessed a three-fold growth because of subsidies for low-speed vehicles.

Endorsing Chaudhary’s view, Amit Gupta felt support to manufacturers of low-speed EVs was necessary to improve the quality of vehicles. The government should also focus on developing charging infrastructure and providing subsidized electricity to private charging stations for faster adoption of EVs, he said.

Earth Energy’s Raval said companies could benefit if state governments do away with some of the formalities that would have to be followed before a new vehicle is launched.

Pratik Gupta suggested that for demand to increase, the government needs to procure EVs to replace its vehicles and incentivize companies to increase EVs in their fleets.

Saurav Kumar said, “We expect the government to incentivize lithium-ion battery manufacturing and achieve a significant degree of standardization to have battery packs that suit Indian conditions.”

Here is a look at the significant developments that shaped India’s EV landscape in 2020 and gave us a sense of things to come.