India to have 87% EV penetration in new vehicle sales by 2047: Report

Federation of Indian Chambers of Commerce & Industry's (FICCI) Electric Vehicle Committee and Yes Bank's latest e-mobility report on India for 2047 has envisioned 87% xEV penetration (electromotive vehicles) in new vehicle sales, and 85% of the xEV value chain localisation. Segment-wise, it envisions 90% of EV penetration for two-wheelers in the next 25 years; 91% for three-wheelers; 79% for passenger vehicles; and 67% for buses.

The report formulates an accelerated roadmap to achieve these goals. Tarun Kapoor, advisor to the Prime Minister, PMO, addressing the 'FICCI Roundtable on Electric Mobility', said the time for electric vehicles in the country has come and India needs to move in this direction mainly because of our energy security and environmental concerns. "From the government side also, we now want to focus on driving this sector so that not only do we have more and more electric cars, buses, and two-wheelers on the road, but we also become a manufacturing hub for the world."

The report identifies opportunities offered by a less than 20 mn domestic vehicle market, and the global shift towards electrification, supported by tailwinds such as tightening emission norms, central and state incentives on vehicle purchase, and demand aggregation, among others. It also recognises local industry development due to the need of products made for the Indian drive cycle, schemes such as Production Linked Incentive Scheme, and localisation norms for demand incentives.

The FICCI EV panel and Yes Bank report also finds several challenges that remain to be fully tackled -- ranging from high upfront cost & constraints on vehicle finance, safety concerns, and nascent global inroads; to limited access to key raw materials, among others.

For cost alleviation and investment drive, it suggests demand incentives till significant xEV penetration and emissions-based taxation, while also creating credit pathways for financing xEVs. On the supply side, it identifies local R&D ecosystem development in priority areas as a key imperative – including for recycling and alternate energy sources.

Kapoor said the auto sector in India is already well established, which means all leading players are already in the market. "It is just about transitioning which should be easy and all stakeholders need to work together to strengthen the EV sector," he said. He said in 2-wheelers, India should aim to transition close to 100% in the next 5-7 years.

"The price has come down slightly as India is a very price-sensitive market and therefore, the price has to come down further. The support from the government including subsidies, taxes, and policy reforms will not take us beyond a point but it is the industry who must take it forward," he asserted.

Kamran Rizvi, secretary, the Ministry of Heavy Industries said the electric vehicle sector in India has a great chance to become a leader and urged the industry to focus on making batteries lighter and reduce the dependence on rare earth magnets, which are currently being imported.

Industry representatives present at the roundtable sought an extension of the FAME II subsidy scheme by another 5 years when it comes to an end in March 2024. This was the ask from the industry across the XEV segment i.e. 2W, 3W, 4W, and buses.