The private passenger vehicle space will see a decline in the cost of electric four-wheelers, and it is expected that electric four-wheelers will achieve parity with those with an internal combustion engine by 2030, says a study by the Council on Energy, Environment and Water, a not-for-profit policy research institution. The study, titled “India Transport Energy Outlook”, assumes that market forces will continue to impact the evolution of both passenger and freight transport in the absence of a dedicated policy push to promote any particular model or technology. “We have assumed that by 2030, electric four-wheelers will reach cost parity with the ICE in terms of capital cost. For other modes, the rate of decline will differ since the share of battery costs differs for each model,” the study reads.
The study has taken a weighted average cost to reflect assumptions made to take into account the difference that exists between commercially- and privately-owned cars. “The weighted average is calculated for four-wheelers based on the average historical share of commercial four-wheelers registered in India in the last ten years. The capital cost for all vehicle categories reflects the latest market prices,” reads the annexure with the study. The study also suggests that the private passenger vehicle space is set for disruption due to electric vehicles, but will only be able to achieve a penetration rate of 30% of all new vehicles by 2030, whereas vehicles with IC engines will continue to corner a market share of 52% of all new passenger vehicles, and CNG will have 18%. In fact, the study suggests that with dedicated efforts in the right direction, India can achieve penetration of 74% of all new electric vehicles being BEVs by 2050. “Our assessment emphasises the importance of creating the charging infrastructure and support ecosystem required for electric vehicles across the country rapidly to take full advantage of the declining cost,” the report adds.
This study is based on a GDP assumption which represents a high growth scenario for India, but it has also considered the impact of the COVID-19 pandemic, which resulted in a negative growth rate in 2020 and a V-shaped recovery in the next year as estimated by the government. It could also explain why the study downplays the government’s ambition of eliminating the sale of all petrol and diesel vehicles by 2030. “We are going to introduce electric vehicles in a very big way. We are going to make electric vehicles self-sufficient like UJALA. The idea is that by 2030, not a single petrol or diesel car should be sold in the country,” Piyush Goyal, Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles, had remarked in 2017. More recently, Nitin Gadkari, the Minister of Road Transport and Highways, claimed that the use of petrol in India will disappear in the next five years. "With full faith I want to say that petrol will vanish from the country after five years. Your cars and scooters will either be on green hydrogen, ethanol flex fuel, CNG or LNG,” he added.
The study also states that a growing economy and rapid urbanisation have increased the mobility needs of a relatively young and ambitious population. “The modal share of four-wheelers in motorised passenger service will increase from 9% in 2020 to a staggering 45% in 2050, mainly driven by the desire to own a personal four-wheeler with increasing income levels as well as the growth of on-demand mobility services (such as Ola and Uber),” it explains. In the two-wheeler segment, half of the two-wheelers sold in 2030 could be electric, and by 2050, the penetration could be as high as 90%.
Meanwhile, the study foresees a relatively slower uptake of electric buses in the first decade due to high upfront capital costs and charging infrastructure requirements. It suggests that increasing the uptake of electric buses will require a focused policy effort to increase the share of buses in public transport, which could address the challenge of high upfront costs. “Measures such as demand aggregation, or other interventions that seek to reduce the upfront cost borne by states and municipalities, will be critical for the electrification of this segment,” the study reads.