India’s EV growth story must gather pace

Is the India EV growth story slowing?

According to S&P Global Ratings research, the EV penetration rate (sales of electric vehicles as a percentage of total light vehicle sales) in India for CY22 stood at just about 1.1%. That is substantially lower than the Asian average of 17.3%. The study includes China, Japan, South Korea, Singapore, Thailand, Vietnam, Malaysia, Indonesia, and Pakistan. 

China is at the forefront of EV penetration, standing at 27.1% while South Korea has fallen to 10.3% post a discouraging start. Japan’s EV penetration is just 2.2%, but that is expected to change rapidly in the coming years. For too long, the Japanese have stayed wedded to the internal combustion engine and they have tried to protect that turf. Now there is a lot more urgency even in Japan. Thailand has the fastest rate of electrification at this juncture.

Is it a Code Red Emergency for India?

The EV sector is just in its moulding stage, and as various studies suggest, could be the future of automobiles once the paradigm shifts away from fossil-fuel vehicles. India, which is the most populated country at the moment, has not managed to fully reap the benefits of its demographic dividends. However, the EV industry in India could be in a sweet spot due to an army of highly skilled labour force. 

At the moment, other Asian countries like Thailand, China, Taiwan are ahead of India in the implementation of their EV goals. India must ensure not to lose their best workers to other nations who offer better job prospects. In addition, given the vast expanse of the nation and its rich resources, India should aim to be one of the top manufacturers of EV components, where it could have a natural trade advantage.

How India can play its cards right?

Although India imports its entire requirement of cells, PLI schemes could change the tone of the game as 50 GW of battery capacity with advanced chemistry cells are set to be built by 2025. The recent discovery of Lithium in the mines of Jammu and Kashmir will be auctioned soon, with more of this resource having been found in Rajasthan. On the corporate front, among the traditional Asian Internal Combustion Engine (ICE) companies who have moved into EVs, the Tata Group of Companies hold the seventh spot in terms of the proportion of EV sales (currently at 6%). This number is estimated to rise to 20% of total sales by 2026.

Here is what India can do

India can leverage its growth by taking valuable lessons from the growth stories of other nations like Japan, Singapore, and Dubai. In a sense, it is about a lot more ownership for the auto sector transition needed. At a macro level, India has made renewable energy its priorities. However, EVs have been more like a chicken and egg situation. Lack of EV infrastructure is impacting the EV output and in turn the lack of EV output is impacting the infrastructure. However, India is investing heavily in EV infrastructure so as to make the growth of EVs truly scalable. Hopefully, the face of this sector can change drastically in the coming years as the pieces fall in place.

Content Source: Business Standard