India’s EV Drive Offers Rs 3 Lakh Crore Opportunity, Says Crisil
EV and component makers can earn potential revenue of Rs 1.5 lakh crore across segments, says Crisil.
In the next five years, India’s push for electric vehicles presents a Rs 3 lakh crore opportunity for various stakeholders, according to Crisil Ltd.
Original equipment manufacturers as well as component manufacturers can earn potential revenue of about Rs 1.5 lakh crore across vehicle segments, Crisil said in a report emailed to BloombergQuint.
Potentially, around Rs 90,000 crore, in the form of disbursements for vehicle financiers—with shared mobility and insurance accounting for the balance—is also available, the report said.
The drivers of EV adoption are evident—rising fuel prices and higher cost of internal combustion engine, or ICE, are impacting conventional vehicles' affordability, while government support for EVs makes it a more viable option.
Central government schemes such as Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India, Phased Manufacturing Plan, and Production Linked Incentives are also a key factor accelerating India’s EV adoption, the report said.
According to Crisil, startups with new-age business models as well as OEMs with established businesses have shown interest in manufacturing EVs. Several state governments have also provided demand incentives and capital assistance for setting up greenfield manufacturing plants.
In sum, the emergence of EVs is an opportunity for both existing and new industry participants to innovate and capitalise on the quickly evolving passenger and cargo mobility. To address ecosystem challenges of the EV industry, the government is considering rolling out a structured battery swapping policy. Such facilitations will go a long way in realising the EV potential. In addition, improvement in availability of finance will push EV adoption.Jagannarayan Padmanabhan, Director, CRISIL Ltd.
EV Adoption, A Countrywide Movement
Data on the Vahan portal shows that the share of electric three-wheelers increased to almost 5% of three-wheelers registered in FY22, from less than 1% in FY18. For electric two-wheelers and buses, the percentage rose to almost 2% and 4%, respectively.
The shift is not limited to large cities. Smaller towns are also entering the fray, driven by the government’s fiscal and non-fiscal measures. As per Vahan data, the contribution of the top 10 districts, in nationwide sales of electric cars and three-wheelers dropped from 55-60% in FY21 to 25-30% in FY22. For two-wheelers, the percentage declined from 40-45% to 15-20%.
Emerging EV Trends
New trends and business models are expected to emerge as EVs gain traction in India:
Battery-as-a-service and public charging stations: Has a pay-per-use model and aims to reduce the initial outgo of the customer, improve viability, address range anxiety and, in turn, increase asset utilisation.
Mobility-as-a-service: It focuses on shared mobility by linking operations with charging infrastructure. Here, too, the vehicle and charging infrastructure are deployed on a pay-per-use model.
Micro-mobility: Provides last-mile distribution of cargo by way of micro-rental of electric two-wheelers and three-wheelers, operating on a self-drive rental model. The model is typically asset-light and based on open-source operations, where the user can hire and deploy vehicles.
