National Institute of Industrial Engineering

(NITIE), Mumbai

Industrial Organization
Mid-Term Assignment

A report on:
“Market scenario on India's Electric Mobility Sector”

By:

Rahul Verma
PGDIM-27
Roll No – 2002168

Under the guidance of:

Prof. Binilkumar A S
Assistant Professor (Economics),
National Institute of Industrial Engineering (NITIE),
Vihar Lake, Mumbai - 400087

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Introduction
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India is one of the largest car markets in the world, currently standing as the 5 th
largest market for cars and has the potential to reach among the top 3 in the near
future. As per a report [1], about 400 million customers will be in the need of mobility
solutions by the year 2030. That is one side of the story and the other side is that the
country needs a revolution in the electric vehicle mobility scenario’s current trajectory
of adding ever more cars running on expensive, imported fuel and cluttering already
overcrowded cities suffering from infrastructure bottlenecks and intense air pollution.
India’s cities will choke. A transportation revolution will have many components –
better ‘walkability’, public transportation, railways, roads – and better cars. Many of
these ‘better cars’ will likely be electric.

India is on the verge of revolutionizing its mobility system specially with the incoming
scope for electric mobility. Given the nascent stage of the EV technology evolution,
sizable investments are required in R&D and product development, both on the
automobile platforms and battery technology. In the backdrop of tightening emissions
and increasing awareness on the green environment, EVs are the way forward for
the automobile industry. However, there are certain internal and external challenges
associated with the EV industry like lack of awareness, lack of financing with
financers not taking a risk for investing into financing EVs for individuals and meeting
the changes that have come in the product portfolio in terms of its production,
manufacturing, component supplies.

To overcome the above-mentioned challenges, the government take up an initiative

in which it has devised a twofold approach through the Faster Adoption and
Manufacturing of Electric Vehicles (FAME) Scheme, which aims to benefit Indian
industry and citizens. This government scheme’s second phase offers 1.4 billion
dollars in incentives to elevate electric vehicle (EV) growth in our country [2]. India’s
efforts in implementing several policies, including FAME II, shows that the country’s
vision for a shared, clean, and connected mobility system is on point.

The Government of India’s think tank, Niti Aayog, and Rocky Mountain Institute have
jointly prepared a report that quantifies the energy and carbon savings that the
vehicles eligible for FAME II will deliver over their lifetimes. Assuming all vehicles
eligible for FAME II incentives are deployed, the net savings would be 5 million tons
of oil equivalent (Mtoe) and 7 million tons of CO2.

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With these initiatives being taken up by government, more and more Indian
companies are coming up towards investing in India’s electric vehicle mobility sector.

Source: auto.economictimes.indiatimes.com

Market Overview

India is on the verge of having and unprecedented growth its mobility system. The
mobility sector in India is dominated by two-wheelers (scooters and bikes) and three-
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wheelers (autorickshaws and rickshaws) that have a significant role in last mile
mobility system of the country.

At 22 cars on every 1000 people in India, the ownership of the cars is very low, while
the two-wheeler ownership is among the highest in the world. While electric vehicles
(EVs) currently account for less than 1% of total vehicle sales in India the market is
growing rapidly and expected to be worth around at least INR 475 billion by 2026,
registering a CAGR of above 44% during the forecast period (2021-2026). The two-
wheelers segment has till now accounted for the largest share of this market at sixty
two percent, and then comes the three-wheeler segment at thirty seven percent.

Source: https://www.mordorintelligence.com

The Indian electric vehicle market usually varies at a high degree basis states, which
depends on factors such as demographics, landscape, income levels and
urbanization. For example, the state of UP, has with one of the lowest urbanisation
rates and has has seen significant increase in electric two-wheelers while on the
other hand Maharashtra, has a higher urbanisation rate, and has the highest
penetration of electric three-wheelers and passenger cars.

- The penetration of electric two-wheelers is projected to reach up to 15% by 2025

fromn1% currently which can be counted as a significant rise. Low and medium
speed electric vehicles specially two-wheelers (up to forty km per hour) with lead-
acid batteries dominates the market currently but the demand for Lithium-ion battery
models is expected to grove at a fast pace under the various government incentives
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and demand from bike and scooter rental companies such as Yulu, Vogo,
BounceBikes and others. Many original equipment manufacturers have also
launched high-speed (more than 40km per hour) electric scooters; two (like Okinawa
& Ather) & has succeeded in fulfilling the local manufacturing requirement under the
FAME II scheme and thereby unlocking subsidies. Hero Electric, Ather Energy,
Ampere, Okinawa, are establishing manufacturing units throughout the country. E-
commerce companies (Amazon etc.) are launching several initiatives to use e-
Mobility for last-mile deliveries to reduce carbon footprint. India is experimenting with
e-Mobility for public transport, and the country has deployed electric inter-city buses
across some major cities.

Three-wheelers market segment is more dominant in the last mile connectivity in

several states including West Bengal, Bihar, Uttar Pradesh and Delhi and the electric
three-wheeler market segment is expected to grow at a very fast pace. Furthermore,
the potential for lies in converting the pedalling rickshaws. With a push from the
government towards the ICAT-certified models from 2018, the different shares of
larger players in the e-rickshaw segment (e.g. Kinetic Green, Lohia Auto and
Mahindra Electric) is growing gradually.

Now coming to the four-wheeler market segment which has right now the least
electric vehicle penetration of 0.12 percent (3,500 passenger electric cars have sold
in 2020) but may grow to 5 percent by 2025. The demand for the medium to short
term will be driven by fleets – including delivery services for goods. For the fleets in
the commercial segment, penetration forecast is between 20-30 percent).

Current Adoption:

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Trends

Electric vehicles scenario in India has opened up ample business opportunities for
automobile companies within the country. India as a country is expected to achieve
big success in penetrating into electric-mobility by the year 2030 as explained in the
Introduction section of this paper.

The reason is very obvious; the hot topic of today i.e. the alarming levels of pollution
indices that keep on rising, and the hefty amounts that the country must pay for
annual crude oil imports. In December 2017, New Delhi was in a state of red alert. If
India successfully manages to achieve this target by 2030, it can save about 1 Giga
Tonne of emissions[3].

While electric vehicles are trending with government’s policies as seen through ease
in taxation, people are not extremely comfortable with the electric vehicle’s
technology yet. This is going to be overcome with time, as the world is moving
toward electric vehicle highway coalitions. Electric vehicles distribution companies
are also venturing with various technology partners to provide charging stations and
a charge-per-unit basis.

Various state transports are also inducing different types of electric vehicles into
mass transit of people at special places like railway stations, airports, and major civic
body buildings. These areas are a lot more structured, and their structural
infrastructure can easily be transformed into charging stations with ease of
installation — from parking lot to electric vehicle charging station cum parking lot etc.

Start-ups that have been leading the adoption of electric mobility in India are now
running out of road due to lack of financial support amidst this long ongoing
lockdown. Road transportation as part of mobility sector and fossil fuels have always

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been related since the past with electric vehicles succeeding only in a few niche
markets.

In different recent studies, it has been observed that the world outside Europe,
China, and the United States is lagging in terms of EV market exploration for various
reasons like lack of government initiatives, insufficient/unsuitable charging
infrastructure, and cultural differences regarding mobility models, etc. (Deloitte,
2020).

Meanwhile, the difference of road transport mobility demand characteristics of India

compared to other developed countries may be understood from the fact that two-
wheelers contribute to almost 79% of total vehicle demand in India (NITI Aayog
Report, 2020).

Utilities from infrastructure firms and government agencies are optimistic on the
electric vehicle future and are working on ground level to create affinity toward
electric vehicles in the near future as demand soars.

For example: Even the state governments are also introducing electric minibuses for
intracity commuters. The different India states have also launched various policies
that support powertrain electrification by stimulating demand, local manufacturing,
research and development, and infrastructure development. However, only 10 states
in India have EV policies as of now:

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 Source: Kearney Analysis (www.kearney.in)

As per a McKinsey report, their models suggest that demand for small-format e-
mobility options could rise substantially over the next decade. For 2W e-vehicles,
sales could reach between 8 and 9 million by 2030, when they would account for
about 35 to 40 percent of all 2W vehicles sold.

For 3W e-vehicles, about 500,000 to 600,000 could be sold in 2030, representing

about 60 to 65 percent of purchases in that class.

Source: McKinsey Insights (www.mckinsey.com)

Shared mobility space of India is another sector that shows up huge promises for the
electric vehicle industry’s future in the country. The shared mobility demand in the
country is also expected to grow on a huge scale.
The food and grocery delivery vehicles for the existing and upcoming food delivery
markets as well as the e-commerce boom has led to the rise in the demand of two-
wheeler electric vehicles.
Other various popular two-wheeler uses in Indian commercial market include ride
hailing and self-driving rentals, with a year-on-year growth of 40 to 50 percent and
100 percent, respectively, up until 2025.

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For the three-wheeler vehicles, passenger mobility for within city and intercity travel
will be the greatest demand driver, with expected YoY growth of 40 to 50 percent,
followed by goods and services delivery, with year-on-year growth of 14 to 16
percent.[4]

Source: McKinsey Insights (www.mckinsey.com)

Important Market Drivers and Barriers

The important drivers of EV market and the roadblocks regarding the increasing of
electric vehicle penetration and success in India are summarised below:
Drivers
Government initiatives and policies helping grow investment
Huge Investments from automotive players
Increasing the variety in products portfolio to attract different groups
Improving air quality cognizance and pollution issues
Increasing buying power of tier-1 city consumers
Less ownership cost for electric vehicles as compared to IC Engine vehicles

Barriers
Govt incentives and processes that are not easily comprehensible
Downward sloping trend in the country’s economics due to Covid-19
Downward sloping trend consumer expenses of Tier-2 & 3 cities

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 Shortage of raw material limiting the indigenous manufacturing of batteries
Lack of infrastructure for charging batteries
Electricity network reliability issues
High initial/capital costs of electric 4-wheelers compared to IC engine vehicles
- Motivation to migrate to EVs:

- *Size of the circle represents the market size pf each segment

Source: TFE Consulting

Digital and Technological Revolution in Electric Mobility

1) Communications and sensors:

Enables: Charge point route planning; IoT based communication; vehicle-to-
infrastructure and vehicle-to-vehicle communication; traffic flow management;
battery swapping information; software upgrades.
Business case: Improved car safety; new mobility-based business models;
reduced range anxiety.

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2) Smart Grid:
Enables: Grid optimized charging and grid stabilization
Business case: Lower charging cost; grid balancing services; higher
concentration of charging points

3) Autonomous driving:
Enables: Self drive to charge points; optimized battery
efficiency and lifetime; high usage of vehicle
Business case: User convenience; lower fuel/operating costs; lower
maintenance costs; reduced auto accidents; improved car safety

4) Blockchain:
Enables: Efficient and secure vehicle charging and billing system; better
integration into distributed energy generation networks; integration of charging
economy with other marketplaces
Business case: Peer-to-peer charging business models; tokenized charging
infrastructure investment; incentivizing sharing of home charging stations;
databased business models

5) New charging technologies:

Enables: Intelligent wireless charging, inductive and faster charging
Business case: Convenient, omnipresent charging
(For example - on a parking spot); car-to-car charging

6) New battery technologies:

Enables: Light weight; higher power density; fast charging; inductive charging.
Business case: Lower vehicle costs; longer range; better charging and driving
performance

7) Battery management system (BMS):

Enables: Monitoring and control of voltage, current state of charge for battery
health check and better performance
Business case: longer battery life; higher operational efficiency and lower
manufacturing cost
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 8) Additive manufacturing:
Enables: Use of cheaper, readily available materials; better designs and
performance of motors; vehicle weight reduction
Business case: Lower vehicle cost and Less fuel usage

9) Nanotechnology:
Enables: Faster battery charging; longer battery life with longer range
Business case: User convenience, better operational efficiency

Recent Developments

 Tata Motors in August 2021 expanded its EV portfolio by unveiling the new Tata
Tigor EV. The new Tigor EV gets a host of design updates and Ziptron
technology which ensures better performance compared to the outgoing model.

 Olectra Greentech in July 2021 announced that along with its sister company
Evey Trans Pvt Ltd, it has won the bid for 100 electric buses. The consortium of
both the companies won the bid to supply 100 electric buses to a State
Transport Corporation in the country under the Government of India’s FAME-II
scheme, on OPEX model basis for 12 years. These 100 electric buses are going
to be used for inter-city operations.

 Ather Energy in February 2021 who is India’s first intelligence EV manufacturer,

moved its USD 86.5 million factory from Bengaluru in Karnataka to Hosur in
Tamil Nadu to increase its two-wheeler production capacity.

 JBM Auto in February 2020 launched two electric buses, namely Eco-Life e9 and
e12 electric buses at the Auto Expo 2020. Powered by fast-charging lithium
batteries, these buses can run 125-150 km in a single charge, depending on the
city’s traffic conditions.

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 In January 2020, the Department of Heavy Industries (DHI) of India approved
2,636 electric vehicle charging stations in 62 cities across 24 Indian states and
Union Territories (UTs) under the FAME II program to promote e-mobility .

Challenges

As the Indian economy is caught up in a slump due to the Pandemic situation, the
future of the mobility market is pinned on electric vehicles and its future. And electric
vehicles technology is, in turn, highly dependent on incentives given by the
government and innovation. At the same time, the government also has to deal with
the consequences of slowdown and invest in the up and coming future ready
technology at the same time. This has led to a deep state of dilemma in the Indian
electric vehicles market which has put the future of electric vehicles in India in a bit of
an unsure grey area.

While there is no scarcity of government incentives and policies in India, the

inadequate charging infrastructure and high prices of electric vehicles are felt by both
by the mobility industry and the end users in the same way.

To know where the coming term of development in the electric vehicle scenario will
happen, one has to look at the current situations and it’s problems for electric
vehicles’ adoption in the country. Ranging from consumer mindset to infrastructural
issues, all of them have a collective effect on the future phase of electric vehicles in
the country.

1) Consumer’s perception
The user’s perception about electric vehicles in India is still not that strong as
compared to IC engine vehicles. The lack of charging infrastructure is a big
gap between electric vehicles and the IC engines vehicle prices. Also, lack of
assurance about a near satisfactory resale value also play an important role in
that. Even though the Indian consumers are becoming more open about
adapting to electric vehicles than before, still the negative or false perception
about EVs is still present in the Indian mindset.
2) High prices
The price point parity between the electric vehicles and IC engine vehicles in
India is negligible. Electric vehicles are very expensive as compared to their

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 conventional fuel powered counters. Take for e.g., the Tata Nexon, whose
price starts from Rs 7.19 lakh, while the Tata Nexon electric vehicle, whose
price starts from Rs 13.99 lakh, a big noticeable difference is evident here.
India being a developing nation, the price of the vehicles normally exceeds
the environmental conscience. This big difference of price between the
conventional electric vehicles discourages a whole lot of interested buyers
from making the final decision to buy an IC engine vehicle.
3) Inadequate battery technology
The utmost critical and important part of an electric vehicle is its electricity
storage batteries. The lithium-ion batteries, as India doesn’t produce them,
they are mostly imported and are the most popular and most widely used
sources of energy for EVs. The country doesn't produce lithium-ion batteries
either and heavily relies on import, mostly from China, which results in
extremely high prices for these components and eventually resulting into high
priced EVs as well.
4) Majority of EVs not covered under the FAME scheme
The government has been making attempts to promote electric mobility
through various incentivising schemes and discounts for electric vehicles. The
terms and conditions of the government’s FAME scheme doesn't support
most of the electric vehicles. The low-speed electric two-wheelers, lead-acid
battery powered electric vehicles are not covered under FAME. The highly
expensive high-speed electric vehicles on the other hand require registration
charge and driving licence. This results in many customers shying away from
buying electric vehicles.
5) Lack of products
There are always hundreds of options from which anyone in India wants to
buy a conventional fuel powered IC engine car or two-wheeler. The case is
completely different in the electric vehicle segment. There are only a few
options and also a majority among them presently are not from established
trustworthy brands. This drives the customers away from buying electric
vehicles.
6) Range anxiety
Range anxiety is one of the most crucial challenges ahead for the growth path
for the electric vehicles market in India. The electric vehicles customers are
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 mostly worried whether the vehicle has the capability of reaching from point A
to point B before the battery runs out. This issue is closely connected to the
scarce charging infrastructure in India. The electric vehicle charging
infrastructure in India too low compared to the conventional petrol pumps.
Also, the available electric vehicles charging stations are concentrated mostly
in urban areas only.

Impact of COVID-19 on the electric mobility sector

The Indian Electric Vehicle Market has been impacted by the outbreak of the
COVID-19 pandemic due to the supply chain disruptions and halt of manufacturing
units due to several lockdowns and travel restrictions across the country. However,
the electric vehicle (EV) market is still in its nascent stage in India. It is expected to
grow at a much faster rate during the forecast period due to various government
initiatives and policies like FAME (Faster Adoption and Manufacturing of Electric
Vehicles) Scheme, which aims to benefit Indian industry and citizens. Currently, the
electric vehicle in India is manufactured in a wat that is hugely being supported by
components that are imported from countries like China. The large original
equipment manufacturers are trying to get into the electric vehicle parts market to
downgrade the reliability on importing and meeting the fifty percent domestication
criteria to access benefits to the government initiatives.

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 Source: https://www.marketsandmarkets.com/Market-Reports/covid-19-impact-on-electric-
vehicle-market-181970499.html

According to analysts from Bloomberg NEF, the COVID-19 outbreak is

leading to negative consequences for electric vehicle sales and battery
manufacturing capacity globally. The auto companies including startups which have
been investing billions of dollars towards electric development might find it difficult to
justify these investments for a little while resulting in delayed launch of new products,
in the post-COVID era, especially larger companies. Another rippling effect of
COVID-19 that may be seen in the short term is the reduced investment of Indian
OEMs in the EV sector. Due to the low risk-taking appetite of OEMs post-COVID-19,
they may defer from making new investments in the e-mobility sector and may strive
to revive existing operations and aggressively sell Bharat Stage-VI vehicles in which
they have already invested. Toyota has already deferred its plan to launch EV in the
Indian market. Recent BS-VI regulations have increased costs of ICE vehicles,
making EVs a bit more attractive. So, while the entire automotive industry will be
impacted including EVs, the impact on EVs may be slightly lower than ICE.

Also, it is said that Electric vehicles will be delayed in India. It is not just about
COVID-19 hitting the market, but the major impact is because of crude oil prices.
The electric vehicles can only take flight when crude oil again jumps to $60. As
earlier, the industry has benchmarked the $100 price of the battery to mass electric
vehicles.

In the long term, the e-mobility sector may benefit from the lockdown. As
human activities around the globe came to a temporary halt, major sources of
pollution—such as vehicular traffic, industries, and construction reduced to a great
extent. With almost all vehicles off the roads, the air quality across many countries
improved greatly. Another expected benefit of the COVID-19 pandemic is the
diversification (or even indigenization) of the EV manufacturing supply chain. The
Indian government’s recent plans to acquire lithium mines in Bolivia, Argentina, and
Chile show the long-term focus of transition to EVs. Further, while the Indian
government has benefitted from the big fall in oil prices during the pandemic, these
prices are likely to bounce back in a post COVID-19 world.

Another important change caused by COVID-19 is usage pattern of the vehicles. E-

rickshaws that were only used for first-and last-mile connectivity are now being used
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for goods delivery. With the removal of lockdown in the country, companies have
also started pursuing their business-as-usual activities. Recently, ride hailing service
provider Ola (under its EV venture Ola Electric) has ventured into electric 2-wheeler
products Indian OEMs such as Ather, Ampere, PueEV, etc, and electric bike-rental
services like Bounce have expanded into other Indian cities, apart from the metro
cities. These activities will give these products greater visibility among consumers.

Way Forward

In coming times, the Indian e-mobility sector will not be something that of luxury
however it would be necessary item for the well-being of human race as the
environmental degradation level is at a worrying level, & the viable solution is only
that the energy sources being used shifts towards a more sustainable option. This,
the usage of electric vehicles will be utmost necessary in the near future. Hence, it is
a better option to be planning and organizing the developments that are going to
occur instead of escaping the change.

Without a question, the integrating policies on the future of mobility keeping in mind
the zero-emission transmission is the need of current times. Now, these policies
must also be considering finances and the health of mobility industry, revenue for the
government and employee opportunities to hundreds of thousands. The near-future
of the electric mobility sector is coming up and will be here to stay, innovate by
evolving and spread its reach.

Apart from this the end-users or the consumers, there are 3 main stakeholders that
will be playing a big role in India’s shift towards electric vehicles.

• The Indian Government: By structuring the rules and emission policies along fuel
consumption and efficiency, defining the aspirations, structured intent and guidance,
exploring subsidies and incentives, it can support electric vehicles adoption and think
about making an ecosystem that is supportive of each of its members.

• The fuel, power and battery charging infrastructure firms: By creating a

supporting foundation, evolving on innovative business models (e.g., swapping

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infrastructure, leasing of batteries and deploying faster charging stations), providing
stable power supply and grid stability, making economies of faster charging
infrastructure work, they can start easy and fast charging and drive electric vehicle
adoption.

• The auto industry: By creating a change in the product portfolio and product mix
bringing electric vehicle parts and vehicles to life, by creating a correct talent pool
and skill set, improving the battery performance and electric vehicles performance
allover, and building scale, the industry can drive the electric vehicle disruption in
India.

The electric vehicle eco space will also be able turn out to be like the egg and
chicken situation. However that was also the case even with IC engine vehicles,
where the vehicles came first, and the road infrastructure came later. So, the battery
charging infrastructure will take its own good time coming, so will the production
capacity for the batteries in India. However, in meantime, the Indian Government has
to also promote hybrid vehicles and plug-in vehicles to make an sustaining
ecosystem for consumers of electric vehicles and all those who need to invest and
get profits from setting up the battery charging infrastructure.

As is quite ostensibly mentioned in the facts and figures, Electric mobility is a far off
dream for the Indian government. Far off but possible. If the country really wants the
vision to accomplish, it’s going to need to have a collaborative effort of every
individual or organization that is significant to the country.

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References

[1]https://assets.ctfassets.net/nvxmg7jt07o2/2FGsIqo5BvkNBhiHDhSOJy/9ae4aa96e708e0e
7e4da178184163630/TFE_Report-India-electric-mobility-Final.pdf
[2]https://www.livemint.com/news/india/extension-of-fame-scheme-will-help-push-sales-
of-electric-vehicles-say-experts-11624783763494.html
[3] https://beeindia.gov.in/content/e-mobility
[4]https://www.mckinsey.com/~/media/McKinsey/Industries/Automotive%20and
%20Assembly/Our%20Insights/The%20unexpected%20trip%20The%20future%20of
%20mobility%20in%20India%20beyond%20COVID%2019/The-unexpected-trip-The-future-
of-mobility-in-India-beyond-COVID-19-Final.pdf

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