Energetica India - June 2020

ELECTRIC VEHICLE E-Mobility in India: Transforming The Landscape for Sustainable Transport The EV story in India cannot be denied. With a growing market, OEMs introducing new EV models, creation of charging infrastructure, development of local manufacturing capability and a supportive policy framework providing the initial boost to encourage growth of the industry, the demand is expected to to pick up over the next few years. Electric vehicle (EV) technology is emerging worldwide as the preferred clean technology for the future of mobility. EVs fare better than their internal combustion engine (ICE) counterparts on a range of transport policy goals. These goals include en- hanced energy security, reduced reliance on crude oil, better air qualityand reduced greenhouse gas emissions. The Indian automobile sectorhas grown rapidly over the last two decades, boosted by domestic demand as well as its emergence as an export hub. India, however, has a pressing need to reduce its oil import dependence. According to publicly available information, the import bill stands at USD100 billion in FY20.India also needs to control its rapidly rising levels of pollution in urban areas. In this context, a shift to clean energy technology like EVs is imperative. EV market landscape in India India is still at a nascent stage of EV adoption, with current EV penetration levels at less than1 per cent.Sales are mainly driven by the two-wheeler (2W) and three-wheeler (3W) segments0.2 million EVs weresold in FY20 . Rohan Rao, Partner Deal Advisory, M&A Consulting, KPMG in India Source: KPMG in India Analysis Most of the existing EV 2W/3W products do not offer perfor- mance comparable to the ICE variants andfall short of consumer expectations. However, mainstream2WOEMs have introduced EV 2Ws recently that promise a better user experience, improved performance andinterestingsoftware features. The upfront cost differential thoughremains as high as 1.5-2xand is likely to restrict volumes in the initial years to high mileage users such as fleets. Another barrier to EV adoption is limited charging infrastructure- contributing to range anxiety; a chicken and egg situation given the low EV volumes and high capital investment.The financial returns from a charging stationremain uncertain, which hinders expansion of charging infrastructure that, in turn, makes buyers reconsider their decision to buy an EV. Another area where capabilities must be developed is in domes- tic battery manufacturing. Today, in most cases, cells are import- ed into India and battery packs assembled locally. However, to be truly “Self-Reliant, we will need to develop cell-manufacturing capability in India to complement the EV sector’s growth. energetica INDIA- June_2020 35