Business Today
Loading...

Electric cars won't sell much, but electric three-wheelers will dominate market: report

The only demand driver in four-wheelers would be from cab aggregators who would benefit from better operational economics and subsidies

Sumant Banerji        Last Updated: February 11, 2020  | 17:32 IST
Electric cars won't sell much, but electric three-wheelers will dominate market: report
Representative Image

Electric three-wheelers or e-rickshaws that have become the face of electric mobility in India are set to corner about 50 per cent of all three-wheelers sold in the country as early as 2024, according to a report by Crisil Research. Electrification will also gain traction in two-wheelers in the next 4 years accounting for about 12-17 per cent of all new two-wheeler sales, but traction in four-wheelers will be slow with only 5 per cent of new car sales estimated to be electric.

The study looked at demand, supply and policy growth drivers for EVs such as battery costs, government subsidy and charging infrastructure, besides conducting a segment-wise analysis of the cost of acquisition and operation of EVs compared with existing internal combustion engine (ICE) vehicles.

"In the context, supply will also be a critical factor for adoption. The top five electric two-wheeler manufacturers are expected to increase their capacity for electric variants from 0.4 million units in fiscal 2020 to over 3 million units by fiscal 2024," says Hetal Gandhi, Director, CRISIL Research. "And in three-wheelers, even incumbent original equipment manufacturers are launching e-autos at a rapid pace. But low-speed, four-seater e-rickshaws are fast emerging as an alternative to e-autos because of being 30 per cent cheaper."

Faster adoption of two and three-wheelers are a function of cost, it said. Typically, electric scooters are cheaper to run compared with ICE scooters. And e-autos are cheaper to both own and run compared with their ICE counterparts. At the other end, sales of personal electric cars will remain in the slow lane due to high acquisition and ownership costs, in the absence of demand incentives.

The only demand driver in four-wheelers would be from cab aggregators who would benefit from better operational economics and subsidies. A cab aggregator e-car that runs 50,000 km a year, for instance, can save about Rs 1.65 lakh a year compared with Rs 35,000 for a personal e-car that runs 10,000 km a year, the study said. And in the commercial vehicles space, subsidies to state transport undertakings will drive sales of electric buses for intra-city operations. It added that poor public charging infrastructure will be the biggest roadblock.

"The government has created a policy push for EVs with the second instalment of the Faster Adoption and Manufacturing of Electric Vehicles in India or FAME II policy and numerous efficiency and emission regulations. However, India has much catching up to do in terms of the four drivers of growth globally - battery price, demand incentives, supply push, and charging infrastructure," says Pushan Sharma, Associate Director, CRISIL Research. "That means policy implementation will be crucial to faster adoption of EVs in India."

The research firm expects the landed cost of the lithium-ion battery - a key driver of EV adoption in India - to come down in line with an expected drop in global prices by fiscal 2024.

"Execution of the government's phased manufacturing programme for EV batteries, too, will help drive down battery prices. Till then, EV adoption will be gradual, giving auto component manufacturers enough time to realign their operations," it said.

Also Read: Delhi Election Results Live Updates: Delhi listens to AAP ki baat! No Entry for Congress

Also Read: Finance minister Nirmala Sitharaman lists 7 green shoots in Indian economy

Also Read: 'Very competent doctors': Nirmala Sitharaman takes dig at Manmohan Singh in Lok Sabha

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close