CEEW Centre for Energy Finance released a report on “Financing India’s Transition to Electric Vehicles” in December 2020. The report estimates the size of EV market opportunity from FY21 to FY30 and the quantum of investment required to realise India’s mobility transition. This write-up is a summary of our key takeaways from the report.
The full report (authored by Vaibhav Pratap Singh, Kanika Chawla, Saloni Jain) is available here and we recommend taking time to go through the details, assumptions and methodology. It assesses segment-wise EV sales, battery requirements, the public charging infrastructure necessary to support the transition, and the need until 2030.
Estimation of India’s EV adoption by FY 2030
NITI Aayog and Rocky Mountain Institute 2019 report outlining India’s vision for 2030 set an ambitious EV adoption target – 70 per cent of all commercial cars, 30 per cent of private cars, 40 per cent of buses, and 80 per cent of two-wheeler (2W) and three-wheeler (3W) sales to be electric by 2030.
According to the analysis conducted by CEEW-CEF using GDP and vehicle sales data, the base target set by Niti Aayog and applying Covid related adjustments to the model – India’s 2030 vision of e-mobility translates into 102 million units of EV sales, demand of 158 GWh of battery capacity and 29,38,000 public chargers. Sale of 102 million EV units till FY30 is a sales opportunity worth USD 206 billion. This is taken as the base case for further analysis.
Further, the study models three EV transition scenarios to forecast the numbers for high adoption (10% more than base), medium (20% less than base) and low adoption (40% less than base) cases. In this write-up, we will talk about the base scenario and medium adoption scenario.
|EV sales FY21 to FY30 (in million)||Base Case||Medium Adoption|
Among the vehicle segments, the study estimates EV adoption to be primarily driven by two-wheelers (92% of total EV sales), followed by private cars and three-wheelers.
At the end of March 2020, the total no of the registered electric vehicles in the VAHAN portal stood at 5,30,560 (does not include unregistered battery-powered electric 3Ws or E-rickshaws). India has a long way to go to achieve its 2030 EV vision and the level of actual EV adoption is likely to be driven by the quantum of regulatory push on demand and supply side, market pull (based on Cost of ownership comparisons) and infrastructure support (for EV chargers).
Battery pack requirement by FY 2030
Battery demand for EVs is expected to be 158 GWh by FY 2030, largely driven by 2Ws which will account for 53% of the new battery demand. To meet this potential demand, under 50% indigenisation of battery manufacturing, USD 6.1 billion investment opportunity is created which can reach USD 12.3 billion under 100% indigenisation by FY2030.
For the medium adoption scenario, the report projects 126 GWh of battery demand comprising of 108 GWh of the new battery and 18 GWh of replacement batteries. By FY30, the battery replacement market is likely to contribute about 11% of total EV-related battery demand.
Public charging station (PCS) requirement by FY 30
The report notes that the demand for public charging points is not just dependent on vehicle sales but also on the capacity of chargers, mode of charging, hours of operation and battery capacity of vehicles.
The report also finds that on an average, only 20% of 2Ws, 50% of 3Ws, 20% of personal cars and 50% of commercial cars require charging at a PCS. Rest are charged using home charging or captive charging. The table below estimates the number of vehicles that can be supported by each type of charger considering this limited use case and 40% utilization factor per charger.
|Particulars||DC chargers >= 50KWh CCS & CHAdeMO||Type 2 AC charger||Bharat DC-001||Bharat AC-001||AC-1 2KW|
Based on these above assumptions and inputs, India would need a network of 29,38,000 public chargers to realise its 2030 vision, with low capacity chargers amounting for 71% of the network. Adoption, creating an investment opportunity of USD 2.9 billion for PCS deployment.
For medium EV adoption scenario – 23,10,000 public charging points will be required.
Investment opportunities for EV manufacturing and deployment
This table presents the cumulative vehicle volume, investments for OEMs, cost for consumers and investment towards charging infrastructure until 2030 for base scenario, based on CEEW-CEF analysis.
|E-vehicle categories||Vehicle Sales (million)||Total production costs||Cost for consumers||Investment towards charging infrastructure development|
|Cars (Private)||3.1||USD 48 billion||USD 55 billion||USD 0.8 billion|
|Cars (Commercial)||2.2||USD 26 billion||USD 29 billion||USD 1 billion|
|Buses||0.1||USD 8 billion||USD 9 billion||NA|
|Three-wheelers||2.6||USD 5 billion||USD 6 billion||USD 0.1 billion|
|Two-wheelers||93.7||USD 91 billion||USD 108 billion||USD 1.1billion|
|Total||101.6||USD 177 billion||USD 206 billion||USD 2.9 billion|
Production of EVs presents an investment opportunity of USD 177 billion driven by 2-wheelers and 4-wheelers for the base scenario. For medium adoption scenario, the size of investment opportunity for EV production is estimated at USD 142 billion.
For a medium EV adoption scenario, Cost & investment summary is as follows:
|Cost & investment summary||Medium adoption (-20% on base case scenario)|
|Total Production Costs (for OEMs)||USD 142 billion|
|Cost for Consumers||USD 165 billion|
|Investment towards charging infrastructure development||USD 2.4 billion|
Need for End-Consumer financing
For a medium adoption scenario, cumulative consumer spending from FY 21 to FY 30 is estimated at USD 165 billion.
In the period until FY 30, consumers will need to spend about USD 206 billion cumulatively to meet the government’s vision (base scenario). Even if 50% of this spending is financed through debt, the banking sector will have to more than triple its current advances of USD 31 billion towards vehicle loans in the next decade.
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