E-mobility forms a vital and essential chain in the transport ecosystem in the transition towards clean energy and net zero emissions. With India’s target to achieve carbon neutrality by 2070, clean mobility is the key to develop and implement low-carbon solutions within the transport sector. With regard to the country’s efforts towards decarbonizing the transport sector, Government of India (GOI) has launched various schemes/ policies and missions to facilitate electric vehicle (EV) diffusion and boost demand in the Indian mobility ecosystem. Also, the national target of 30% EV penetration by 2030 is an important milestone towards achieving India’s vision for a sustainable and cleaner future.
In the last five years, noteworthy progress has been seen in the entire EV ecosystem including charging infrastructure, battery quality and sale of EVs particularly, in the vehicle category of 2-W & 3-W. For instance, EV sales in India have grown at a tremendous rate of 168% between 2020 and 2021, out of which, a major chunk of the sales in 2021, came from 2-W (48%) and 3-W (45%) respectively. It has been estimated that the penetration of electric 2-W shall reach up to 15% by 2025 from the current level of 1%. Likewise, the domestic market for Lithium (Li) ion batteries has exhibited remarkable growth while ensuring compliance to good quality thermal management system. The presence of EV charging infrastructure is expanding and as on 2021, more than 1,700 public charging stations are operational. Further, to aid the uptake of EVs , additional 22,000 charging stations are expected to be set up by oil marketing companies (OMCs) in the near future.
The EV market in a country like India varies widely with respect to state dimensions, topography, income levels, modes of transport, urbanization levels and regulatory framework. It follows a more price-sensitive and consumer-driven approach. It signifies that price is the foremost indicator for large domestic mass wherein, consumers have cost-lucrative options like, subsidies and budget friendly total cost of ownership (TCO) to choose from. Further, features like product quality, performance, ease of accessing service and maintenance provisioning clubbed with user experience influences the consumer behavior to purchase EVs in India.
The recent government policies and subsidies have played a key role in bridging the gap among various strata of the economy by building a sustainable and vibrant electric mobility ecosystem. Further, cost-effectiveness of TCO of EVs in comparison to conventional vehicles, growing awareness of air quality, rising environmental impacts and notified EV policies by the states are some of the key drivers which are favoring the EV transformation in the country. Additionally, B2B partnerships between OEMs and leading logistic entrepreneurs with the objective to pace up, strengthen and address the last-mile delivery segments have also increased in the recent times.
Though the EV ecosystem is moving in the right direction, certain challenges continue to plague this movement. These include (a) inadequate charging infrastructure and domestic manufacturing, (b) lack of high-quality battery technologies, (c) battery burn-outs, (d) battery standardization and recycling, (e) battery swapping, (f) untapped potential of critical raw materials and (f) higher upfront costs and (g) lack of awareness in Tier-2 and Tier-3 cities poses the barrier for its mass adoption.
The COVID-19 pandemic has made the world to understand the needs and implications of having clean energy and electric transportation, pushing the developed and developing countries around the globe to gradually shift from fossil fuel-based sources to low-carbon pathways. It restored the focus of nations towards green environment and sustainability with a special focus on EVs. The enormous rise in demand for same-day and next-day deliveries have propelled the increase in the number of vehicles for providing last-mile deliveries. It is expected that the market for the e-commerce sector will reach $350 billion and contribute to 3.5% of India’s GDP by 2030. It is also estimated that in order to meet the increasing demand, companies may require deploying an additional 1.60 lakh vehicles by the end of this decade.
The pandemic aided in the acceleration of EV deployment, especially, in the metro or, Tier-1 cities with the rapid increase in e-commerce demand. It also helped in creating a positive pressure on the e-commerce industry because of high logistics cost arising due to high fuel prices, to shift their overall pattern towards EVs as a sustainable, affordable and most reliable last-mile delivery option. For instance, many logistic companies like, Flipkart, Myntra, Zomato and Amazon have committed to transform 100% of their vehicle fleet to be EV driven by 2030. Hence, to cope up with the rising challenges of pollution, minimizing fuel consumption, lowering operating costs and reducing carbon footprints to net zero, adoption of EVs in the last mile connectivity is the preferred choice for all.
The G20 member countries account for 80% of the overall energy demand and are responsible for 20% of the emissions arising from the global transport sector .Final energy consumption by the transport sector across G20 countries have almost doubled between 1990 and 2018. In order to limit the global rise in temperature to 1.5˚C, the share of low-carbon energy mix in the sector will need to increase and the G20 member countries should work towards developing more ambitious long-term plans. While previous G20 presidencies have discussed and deliberated on the agenda of deployment of sustainable mobility solutions, there is a need for swift action directed towards complete decarbonization of the transport sector.
Mitigation of GHG emissions that are linked to the transport sector requires a focused and internationally led economic cooperation, enabled by the G20 member countries, as two-thirds of the world’s population is accounted for by them. The G20 countries should establish a roadmap wherein, each member country should follow an integrated and targeted system approach. This initiative would help identify and mark at least 2 to 3 early transition market applications (category or vehicle type) for advanced technology injection and its standardization i.e., best suited to the local conditions by way of strategizing investments, cohesive policies and collaborations. For example, more B2B partnerships among start-ups might be encouraged, targeted and incentivized for last mile connectivity in Tier-2 and Tier-3 cities as a part of this initiative.
It is also suggested that financial resources be mobilized dedicatedly for this purpose by G20 member countries. For instance, to reduce energy imports and increase in-house battery capabilities and EV sales, India has stressed upon ‘Make in India’ products, drafted EV policies and assigned targets specific to states’ demographic conditions complemented by rebates/ subsidies. Similar strategies may be adopted by other countries as well. Additionally, best practices and case studies could be developed in the form of a common database and knowledge sharing platform by involving leading policy makers, OEMs, government institutions etc. and showcased as a scalable option to promote and expand the EV market.
Views expressed are the author’s own and don’t necessarily reflect those of ICRIER.
