According to a report by ICRA, the investment information and credit rating agency, the electric vehicle penetration in India for passenger vehicles is likely to fall between three to five per cent till 2025 when compared to the internal combustion engine counterparts.
The report stated that when compared to countries like the United States and China, India has a lower average car realisation and it will take a long time to achieve price parity between electric vehicles and ICE vehicles. The challenges for EVs are high with India being a price-sensitive market and the economies of scale being a crucial factor for passenger vehicle OEMs to price its model competitively.
ICRA’s analysis says that electric vehicle penetration in the sub-10 lakh segment would be limited and initial traction will come from the higher price segment.
Considering the stranglehold of top two players in the current PV market (with a combined market share of about 70 percent), evolution of EVs is an opportunity for global OEMs to start afresh as an alternative to competing with incumbents (in petrol engined technology) says the report. Maruti and Hyundai enjoy a competitive edge with petrol cars thanks the brand equity, high residual value, as well as a wide dealer and sales network.
The report is not all bad news as it points out a crucial development – The cost of the Li-ion battery has fallen by almost 80% in the last decade to USD 156/kWh. If battery prices continue sliding at a steady pace, the cost of electric vehicles will achieve parity with petrol engined cars over the next 10 years. The report predicts that this combined with improved charging infrastructure would trigger mass adoption of electric cars in India.