– About 2021 EV sales in FY 23, expected to grow by 6000% by 2027
According to the World Pollution Report, in 2022, India ranked third as the country with the most air pollution. The Indian government has implemented a policy on internal combustion engine (ICE) vehicles to reduce air pollution and announced a goal of converting new sales of internal combustion engine vehicles to electric vehicles by 3. The Indian government also said it aims to transform India into a global center for electric vehicle manufacturing.
market size
In FY 2021, about 110 electric vehicles were sold in India worth about 1419 trillion rupees (about 23 billion dollars). In 6000, annual sales are expected to exceed 2027 million units, and the CAGR is expected to increase to approximately 600% until 2027.
<The size of the electric vehicle market in India>
[Source: Netscribes]
The Indian government's increase in taxes on oil has attracted buyers' attention. About 90% of existing private car owners said they are willing to switch to electric vehicles once the electric vehicle infrastructure is established. India's Olectra, Mihindra & Mahindra, JBM Auto, and Ather are focusing on not only developing electric vehicles but also building infrastructure for electric vehicles. Other notable electric car manufacturers include Bajaj Auto, Hero Electric, Tata Motors and Hyundai India.
Market share by EV type
The main mode of transportation in India is two-wheeled vehicles. That is why electric two-wheeled vehicles are dominating the EV market. 2021% of EVs sold in fiscal 60.74 are two-wheeled vehicles. It will lead the EV market for a certain period of time, but its growth rate is expected to decrease due to saturation. On the other hand, commercial four-wheeled vehicles, private cars, and three-wheeled vehicles (auto-rickshaw types) are expected to grow steadily.
[Source: netscribes]
This is a phenomenon that occurs because most of the consumers are looking for alternatives to ICE vehicles and daily transportation due to the rise in gasoline and diesel prices in India.
Indian Government Policy
The Ministry of Heavy Industries under the Government of India has implemented the FAME India initiative from 2015 April 4 to promote electrification of electric and hybrid vehicles. The FAME India phase 1 plan is being implemented for three years from April 2, 2019, with a total budget of Rs 4 billion (approximately $1 billion). About 3% of this support is allocated for demand incentives to support the creation of 1000 electric buses, 12 three-wheelers, 8000 passenger cars and one million two-wheelers.
In addition, through FAME India, the government will encourage consumers to purchase electric vehicles through incentives and build infrastructure such as electric vehicle charging stations. The incentives proposed by FAME India include a tax incentive to lower the tax rate on EVs from 12% to 3% compared to internal combustion engine vehicles under the GST regime, and include interest deductions on loans from financial institutions for the purpose of purchasing EVs. . In addition, states such as Delhi and Tamil Nadu have exempted about 4% road tax on EVs.
Regarding the policy of the Indian government, Samrath Kochar, founder of battery maker Trontek Electronics, said, “The government must create an optimal environment for infrastructure development so that the EV industry can thrive. Currently, as the number of EVs on the road increases and the demand for batteries also increases, it is very important to build an infrastructure for the development of the EV industry.” said
Recently, the Indian government is encouraging Make in India, and it is expected to have an impact on the EV industry as well as other industries. The Indian government raised import duties from 2021% to 4% for the import of lithium-ion batteries needed for EV manufacturing from April 5, and from 10% to 5% for the import of prefabricated battery packs. In addition, Rishabh Ahuja, director of Ingar Electrics, an Indian EV charger and lithium-ion battery manufacturer, said, “FAME India phase 15 and 1,2 plans and incentive policies are the right direction for EV development, but more policies and incentives for domestic component manufacturing will be needed.” he emphasized.
Market changes due to corona
The COVID-19 pandemic has disrupted global supply chains, primarily for EV components, such as minerals used in electricity, electronics and batteries. In FY2021, the supply of lithium-ion battery packs was severely affected, which directly affected EV battery manufacturing and sales. Battery supplies were further halted as the Indian government restricted exports from China, which has a monopoly on lithium-ion batteries. According to the India Electric Vehicle Manufacturers' Association (SMEV), total EV sales in FY2021 recorded 2020 units, a 20% decrease from FY23, but electric passenger cars recorded 6802 units in FY2021, a 53% increase compared to last year.
In addition, as the air pollution level was significantly reduced due to the restriction of vehicle movement due to the blockade of the second and third waves of COVID-19, consumers recognized the impact of internal combustion engine vehicles on the atmosphere and the need for EVs.
competitive trend
The Indian EV market is led by Bajaj Auto, JBM Auto, Mahindra & Mahindra, Olectra Greentech, Tata Motors, Ather Energy, Hero Electric Vehicles, Hyundai Motor India, MG Motor India and Okinawa Autotech.
<Major Companies in the Indian EV Market>
[Source: Website of each company, Comprehensive KOTRA Bengaluru Trade Center]
implication
In line with the Indian government's goal of maximizing electric vehicle sales by 2030, the Indian Chamber of Commerce and Industry (FICCI) has published an opinion that 2030% of energy demand and 64% of carbon emissions associated with mobility can be saved in 37. Improved air quality due to the COVID-19 lockdown has made consumers feel the need for electric vehicles, and it is clear that demand for electric vehicles will continue to grow. Such active encouragement from the government and increased demand from consumers will also increase the demand for electric vehicle parts from electric vehicle manufacturers. For reference, Korea exports $2021 million of lithium-ion batteries (HS code 850760) to India in 3800, so Korean companies are worthy of attention in the electric vehicle parts and battery markets. However, due to the recent Make in India policy, the import duty on lithium-ion batteries was raised from 2021% to 4% from April 5, and the import duty on the import of prefabricated battery packs was raised from 10% to 5%, so localization competition is fierce. Necessities must also be taken into account.
Source: The Economic Times, The Times of India, Netscribes, Indian Chamber of Commerce, Income Tax India, TriBig, website of each company and KOTRA Bengaluru Trade Center