India’s electric vehicle (EV) market is expected to grow at a compounded annual growth rate (CAGR) of 90 per cent in this decade to touch $150 billion by 2030, a report by consulting firm RBSA Advisors, released on Wednesday, stated. The Indian EV market is currently in its infancy and is estimated grow at CAGR of 90 per cent from 2021 to 2030. In terms of penetration, EV sales accounts for barely 1.3 per cent of total vehicle sales in India during 20-21. However, the market is growing rapidly and is expected to be worth more. India's shift to shared, electric and connected mobility could help the country save nearly one giga-tonne of carbon dioxide emissions by 2030.
The report states that EV technology evolution in India requires sizable investment in R&D and product development, both on the automobile platforms and battery/charging technology. Collective investment done by 2W, 3W, 4W, EV component makers and last mile delivery companies was recorded at Rs ~25,000 crore during January– July 2021. The demand incentives provided under FAME II, the launch of state policies, rising fuel prices, tightening emissions laws and increasing awareness of the green environment are few factors making the sector attractive to larger automobile players and financial investors, as per the report.
The spike in demand for EVs, led primarily due to a conducive regulatory framework, has in turn attracted overseas investments into the sector. Earlier this year, Ola electric raised $200 million from a clutch of investors in a fresh funding round, valuing the company at more than $5 billion. Similarly, in early October this year, TPG Rise Climate and Abu Dhabi's ADQ also agreed to invest close to $1 billion in Tata Motors's upcoming EV subsidiary. Also, electric scooter rental start-up Bounce is reportedly making investments of about $100 million (around Rs 742 crore) over the next 12 months across manufacturing of e-scooters and expanding the battery swapping infrastructure.
"EV sales are likely to increase exponentially in the coming days. With the only certainty over the future prices of diesel/petrol being that they are unlikely to reduce soon, more choices being made available to the consumer in terms of electric vehicles and initiatives by the Central and State Governments, the sector is expected to attract huge investments as well. Each of the last three years have seen double digit deals and we expect this trend to continue,” Rajeev R. Shah, Managing Director & CEO, RBSA Advisors, said.
"While many start-ups have raised an initial round of funding during the last three years, they are likely to go in for stabilisation and are, hence, likely to need funds. Further, with the sector gaining critical mass and the traditional auto players also looking at the sector with avid interest and we are likely to see many more deals in the sector for at least the next few years. It is expected that if India is to achieve its 2030 target as far as e mobility is concerned, a cumulative investment of nearly $200 billion will be needed,” Shah noted.
The report estimates that India needs about 400,000 charging stations to meet the requirement for two million EV that could potentially ply on its roads by 2026. To cater to this huge demand, an integrated work approach between the private sector and public sector is required. PSUs have been active in this regard in terms of providing the much-needed charging infrastructure.
Globally, despite the COVID-19 pandemic related worldwide downturn in car sales, wherein global car sales dropped by 16 per cent in 2020, strong demand and momentum was seen in the global EV market where around 3 million electric cars were sold. CYH1-21 sales were dominated by Mainland China and Europe. China saw 1.1 million vehicles being sold with Europe being behind by just 10,000.
The research report concluded by stating that it believes EVs are now the vehicles of the future and has the ability to power us ahead.
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