Mumbai based financial services firm Avendus Capital recently released a market report titled ‘Electric Vehicles | Charging towards a better future | 2020’. The report analyses the electric vehicle (EV) ecosystem in India and forecasts that EVs in India will represent an INR 500 billion (INR 50,000 crores) opportunity by 2025.
This article summarises the pointers from the report on scope and forecast for EVs in different segments, combined with our understanding of the Indian EV market.
We recommend our readers to also take time and go through the full report.
Electric 2W segment
Total cost of ownership (TCO) comparison
For low speed (top speed -25 km/h) and medium speed (~ 40 km/h) 2W segment, the TCO parity with ICE counterparts can be achieved at less than 10 km of daily usage. Whereas, the parity for high speed 2Ws (>60 km/h), TCO is achieved at a daily usage of more than 40 km.
Forecast – By FY25, 2W market in India will account for INR 120 billion and out which 9% will be attributed to electric vehicles.
Retail Market – Though the upfront cost (without subsidy) in the case of a medium–high performance electric 2Ws is 50-75% higher than the ICE equivalents, the operational cost per km is almost 1/6th that of an ICE 2W. Despite TCO parity, the high upfront cost seems to be a dampener for highly price sensitive Indian 2W market that sells more than 2 crore vehicles a year. As the battery prices reduce with the evolution of EV ecosystem and battery technology, a resultant reduction in the upfront cost will drive interest among retail customers.
Fleet or Commercial applications – With high asset utilisation and considerably low operating costs, commercial users are already going electric. The rise of ride-sharing, micro mobility applications as well as vehicle leasing businesses in this space are making the transition easier for corporates, logistics companies as well as individual delivery agents.
Electric 3W segment
A comparison for the 3W auto category indicated lower TCO for electric 3W as compared to an CNG powered 3W for a daily use of 100 km. Even in the absence of FAME II subsidy, the electric variant breaks even with CNG variant.
Another TCO comparison by Avendus team indicates that Li-ion powered e-rickshaws are at parity with Lead Acid battery powered e-rickshaws. If we do not consider currently applicable FAME II demand incentives on Li-ion battery e-rickshaws, these would still have a lower TCO than lead acid counterparts if daily running is more than 120 km.
Forecast – 3W e-rickshaw market in India is expected to be INR 140 billion by FY 25, out of which 40% will be held by e-rickshaws powered by Lithium-ion batteries. At the same time, 3W auto market will be worth INR 40 billion, and 20% of that will be e-autos.
There are close to 7 lakh e-ricks annually sold in the country today with a large proportion being sold by the unorganized players. The study also notes that even though e-ricks and autos operate in mutually exclusive segments right now, the line between these two categories is thin and might vanish in the future as bigger batteries become cheaper.
Electric 4W segment
Retail Usecase – Avendus Capital team’s retail use case comparison in premium segment between electric Hyundai Kona and ICE Creta found a wide TCO gap between the two, with Kona being 8% more expensive. In mid-price segment comparison between TATA Nexon’s EV and ICE versions, the team found a 2% higher TCO for the EV.
Commercial application – A comparison between Mahindra e-Verito and ICE Verito for fleet operators indicated a 12% lower TCO for EV when compared to Diesel car and 2% lower TCO when compared to CNG car. Even without the subsidy, electric cars are close to TCO parity for a commercial use case with daily usage of 120 km.
Forecast – By FY25, Indian retail car market will stand at INR 100 billion, out of which EVs will amount to 2%. The tipping point for electric cars is expected to come around FY27 at battery prices of around USD 120/kWh.
EV adoption in 4W segment is likely to remain restricted to commercial / fleet applications in India. Operators can derive benefits on the back of high vehicle utilisation, and using data to understand usage patterns, charging demands and accordingly tailor the operations to run economically and efficiently. Fleet companies are also showing an inclination to lease the vehicles and operate on an asset light model.
Electric Bus segment
The upfront cost differential in case of buses is substantially high (more than double) due to larger batteries in this segment. For an average daily run of 200 km, the TCO comparison indicates that e-buses are 40% more expensive than ICE variants. However, policy push driven by the objective of clean transportation and government subsidies will determine the penetration of e-buses in the country.
Forecast – By 2025, bus market in India will stand at INR 60 billion, and e-buses will make for a 13% share.
Forecast – EVs are likely to penetrate up to 4% in the LCV segment that will be worth INR 15 billion by FY 25.
However, there is a gaping lack of electric models in the category at the moment and retrofitted vehicles like TATA ACE are being currently used by logistics operators to fill the gap.
Edited by Priyakshi Gupta
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