From: nikhil.kamath
The discussion on electric vehicles (EVs) in India aims to provide a comprehensive overview for new entrants into the industry, covering both the advantages and difficulties, and identifying key areas of focus and necessary skill sets for a successful career [00:00:00], [00:00:39].
Current Landscape of EVs in India
India’s automotive landscape includes approximately 250 million vehicles, projected to reach 450 million by 2030 [02:42:55]. The transition to electric vehicles is viewed as imminent, driven by favorable macro conditions including declining energy prices, government support, and technological innovations [02:56:20].
Current market shares for electric two-wheelers show fragmentation with companies like Ola (30%), TVS (20%), Ather (12%), and Bajaj (12-30%) leading the market [02:01:01].
Cost Comparisons
- Operating Costs: EVs offer significantly lower operating costs compared to Internal Combustion Engine (ICE) vehicles [01:12:00]. For Blue Smart, running EVs costs about 1.20 to 2 rupees per kilometer, while CNG costs 4 to 4.5 rupees per kilometer, and petrol/diesel costs about 8 rupees per kilometer [01:54:50], [01:54:50].
- Fuel Savings: An electric scooter can save approximately 25,000 rupees annually in fuel costs for someone riding 40 km a day [02:51:26], [02:51:38]. For cars, a 3,000 km monthly usage on CNG would cost 3,000 rupees, while an EV would cost substantially less [02:52:13], [02:52:21]. The additional upfront cost of an EV car (e.g., 3.5 to 4 lakhs more than a Swift Desire) can be recovered in about 14 months through fuel savings [02:45:01], [02:45:30].
Driving Factors for EV Adoption
Economic Benefits
The primary drivers for EV adoption are cost savings and energy independence for the country [01:49:09]. India’s oil import bill, which was 120 billion, projected to reach $150 billion by 2030, highlighting the urgent need for a shift to EVs to reduce import dependency [01:46:41], [01:47:00].
Environmental Benefits
EVs contribute to combating climate change by reducing emissions, particularly in transportation [03:26:00]. Even if electricity generation is 100% coal-based, an EV is 30-35% more efficient than an ICE vehicle [03:59:57]. This efficiency gap is expected to widen as the grid becomes cleaner over the next 10 years, potentially leading to 70% less emissions from EVs compared to ICE vehicles [04:49:00]. Also, EVs have zero local emissions, which is crucial for reducing air pollution in cities [02:40:00].
Challenges and Opportunities in the Indian EV Market
Charging Infrastructure
The biggest challenge for EV adoption is charging infrastructure [01:16:00]. Blue Smart operates on an interconnected model of energy infrastructure and mobility; their fleet of 5,000+ Tata EV cars serves as an anchor tenant for their charging infrastructure, which is essential for the model to work [00:53:00], [01:00:00].
Policy Inconsistencies
Despite government support, significant policy gaps hinder the EV industry’s growth [02:46:00].
- Subsidies: The FAME II subsidy for scooters was reduced from 60,000 to 22,000 rupees, impacting margins [02:42:29]. The PLI (Production Linked Incentive) scheme is structured in a way that disadvantages EV-specific companies, as it requires large revenue or specific manufacturing types not always applicable to startups [02:37:00], [02:37:00].
- GST: EVs are taxed at 5% GST, but batteries are at 18% [02:46:50], creating an inverted duty structure that disadvantages EV-specific companies [02:47:04].
Battery Life and Degradation
Battery cells are imported into India, with companies assembling them into packs [02:04:03]. Cell manufacturing requires massive investment (4,000-5,000 crores) and high demand to compete globally [02:05:12]. Thermal management is a key differentiator in battery pack quality, especially in India’s hot climate [02:15:15]. High temperatures and fast charging can lead to battery degradation, though good manufacturers are pushing battery life significantly [02:30:00], [02:30:00].
Consumer Perception
For personal mobility, consumers are often hesitant to adopt battery swapping due to concerns about manually lifting batteries, getting an older battery for a new one, and the emotional attachment to owning the entire vehicle [02:29:51], [02:30:22], [02:35:30]. Daily usage patterns are similar across Tier 1, 2, and 3 cities, with average daily usage being around 30 km, and buying patterns also showing no meaningful difference [02:48:51], [02:49:09].
Future Prospects and Opportunities
Infrastructure Development
- Charging Networks: Blue Smart aims to create massive EV charging infrastructure, leveraging its fleet as an anchor tenant [01:10:00].
- Battery Swapping: Sun Mobility focuses on battery swapping for two and three-wheelers, providing a cost-effective solution cheaper than CNG [02:20:02]. They have over 600 touchpoints in Delhi and Bangalore, aiming to have more than petrol stations soon [02:24:14]. This model addresses range anxiety and refueling time [01:19:00]. Battery swapping could also be viable for trucks and buses, especially for long-distance routes, as it offers a faster alternative to 3-hour fast charging [01:53:00], [01:53:00].
- Standardization: Ather Energy’s charging standard has become the National Standard, potentially allowing other brands to use their charging stations in the future [02:00:23], [02:00:23].
Battery Technology and Recycling
Battery recycling presents a significant opportunity in India. The cost of materials in a typical 4 kWh battery pack is about 10-20), allowing for substantial profits [02:28:14]. A national policy aims to keep lithium within the country, making recycling a guaranteed business given the growing number of EVs [02:29:50].
New Business Models
- Battery-as-a-Service (BaaS): Sun Mobility offers BaaS, where customers buy vehicles without batteries, paying for energy use or a subscription [02:21:53]. This makes EVs cheaper to buy and operate than ICE vehicles [02:20:02].
- Mobility-as-a-Service (MaaS): Sun Mobility also provides MaaS for fleets, offering the vehicle, energy, data, and maintenance for a monthly fee [02:27:03].
- Subscription Models: While attempts at subscription models for personal two-wheelers have faced consumer resistance due to the emotional attachment to ownership, there’s still a big opportunity for companies to crack this model, especially with connected vehicles that allow tracking usage [02:53:55], [02:54:04].
Policy Evolution
A carbon tax is likely to be implemented in India, eventually flowing through to everything, including vehicles [02:58:00]. This could further incentivize EV adoption. Delhi has already successfully implemented an “ambient air quality fund” by taxing petrol/diesel, which has sustained EV incentives for years [03:00:03].
Entrepreneurial Opportunities
For budding entrepreneurs, several opportunities exist:
- Battery Recycling: This is seen as a stable, high-potential business due to the massive number of vehicles and guaranteed demand [03:18:21], [03:22:00].
- Data & AI in Mobility/Energy: The intersection of energy and mobility offers a significant opportunity for data and AI plays, connecting new markets [03:02:59].
- New Form Factors: Instead of building traditional scooters, entrepreneurs should focus on disruptive new EV form factors like micro-mobility or vehicles for specific use cases [03:04:48].
- Franchisee for Swapping Stations: With an initial investment of 1.5 to 5 lakhs, an entrepreneur can set up a battery swapping station, potentially yielding 18-22% return, leveraging existing shop spaces for additional business [03:52:30], [03:54:30].
The EV industry in India is poised for massive growth, and while challenges and opportunities in the electric vehicle industry remain, the overall outlook is overwhelmingly positive [02:57:03].