India’s transition to electric vehicles

Peter Wells. India as a whole has done pretty well in adopt­ing elec­tric vehicles, but there’s plenty of scope to do more. The coun­try acknow­ledged early on that there were oppor­tun­it­ies for gain with the trans­ition, not­ably when it comes to redu­cing the health effects of air pol­lu­tion and noise. Accord­ingly, they have been sup­port­ing this change since 2015, not­ably with the Faster Adop­tion and Man­u­fac­tur­ing of Hybrid and Elec­tric Vehicles (FAME) sub­sidy scheme that sup­ports the pur­chase of elec­tric vehicles and install­a­tion of char­ging points and pur­chase of elec­tric pub­lic transport.

Still, at the moment, it is lag­ging behind its ambi­tions. By 2030¹, the coun­try aims for 30% of private cars, 40% of buses, and 80% of two-wheel­ers and three-wheel­ers to be elec­tric among new pur­chases as part of a push to reduce over­all emis­sions by 45% by 2030. As of now, elec­tric vehicles make up about 50% of 3‑wheelers (the so-called “tuk tuk” vehicles), about 5% of 2‑wheelers, and 2% of cars bought in 2024. I think most extern­al people look­ing at this would say that’s far too ambi­tious as a target.

Alto­geth­er, India, is a bit behind oth­er major mar­kets like China, which is now a sig­ni­fic­ant lead­er in both mar­ket pen­et­ra­tion and as a loc­a­tion for pro­duc­tion. But it is ahead of oth­er com­par­at­ive mar­kets like Brazil, for instance.

The mar­ket has his­tor­ic­ally been primar­ily dom­in­ated by com­mer­cial vehicles and a strong pref­er­ence for two-wheel and three-wheel vehicles. These are hard-wear­ing vehicles used in com­mer­cial set­tings like taxi ser­vices and the like — just how per­form­ant EVs will be in that set­ting is still up for debate². Long char­ging times, high own­er­ship costs, and lim­ited range can increase³ the risks for busi­ness own­ers invest­ing in this new technology.

India has man­aged to drive some elec­tric sales among two and three-wheel­ers, but it’s cer­tainly not tip­ping the mar­ket over. That being said, this has led to some inter­est­ing leapfrog­ging, like the emer­gence of bat­tery-swap­ping points that allow drivers to power up their two and three-wheel­ers without delay.

That sys­tem is still strug­gling to find its feet, not­ably because of a steep learn­ing curve when it comes to the rate of degrad­a­tion of bat­ter­ies, how quickly they can be charged, con­sumer edu­ca­tion, but also elec­tri­city rate nego­ti­ations, sub­sidies, and so on. But it is show­ing prom­ise as a way to meet com­mer­cial drivers’ demands. Still, we’ve been see­ing a sig­ni­fic­ant trans­form­a­tion of the car sec­tor in the last 10 to 15 years, with a grow­ing interest for per­son­al cars.

We’ve been see­ing big glob­al pro­du­cers like Toyota, Suzuki, Nis­san, and Hyundai set­ting up man­u­fac­tur­ing hubs in India​.Car man­u­fac­tur­ers glob­ally are find­ing them­selves hav­ing to adapt to volat­il­ity of demand and grow­ing geo­pol­it­ic­al instabil­ity. In that con­text, it’s becom­ing increas­ingly cru­cial for them to be able to quickly to adapt to unex­pec­ted short-term hits, which are dif­fi­cult to forecast.

India, which touts man­u­fac­tur­ing costs 10–25% lower than oper­a­tions in Europe and Lat­in Amer­ica, is becom­ing part and par­cel of that very com­plex and con­stantly shift­ing struc­ture. Still, inter­na­tion­al man­u­fac­tur­ers implanted there are equally inter­ested export­ing these cars to Asia and Europe than in devel­op­ing their foot­print in the coun­try — which still has a rel­at­ively small but grow­ing elec­tric car mar­ket, com­pared to its population.

Part of the story is that India has been quite busy build­ing some walls to pre­vent the Chinese car from flood­ing the mar­ket, so they’ve imposed sub­stan­tial tar­iff bar­ri­ers against fin­ished vehicles com­ing into the mar­ket and insist that com­pan­ies want­ing to work with India do so with a loc­al partner.

India’s new EV policy, the Scheme for Man­u­fac­tur­ing of Elec­tric Cars policy, which lowers import taxes on 8,000 elec­tric cars per annum for auto­makers⁴ invest­ing at least $500 mil­lion in man­u­fac­ture in India that uses 50% of com­pon­ents sourced loc­ally. In this con­text, loc­al man­u­fac­tur­ers like Tata Motors and Mahindra are becom­ing sig­ni­fic­ant play­ers and could become more so in the future.

The real­ity of it is that sub­stan­tial bar­ri­ers to suc­cess are still in place, which elec­tri­fic­a­tion will not solve. For instance, many Indi­an cit­ies suf­fer from a lack of park­ing, which means drivers will often dip back into traffic after drop­ping off their pas­sen­gers and drive around with an empty car until they can pick them up again. Poor rail­way net­works mean many will travel into town on three-wheel­ers, con­trib­ut­ing to cit­ies’ con­ges­tion prob­lem. Address­ing these infra­struc­ture issues would already go a long way towards redu­cing emis­sions before EVs even come into play.

Then you’ve got the cli­mate issues — run­ning air con­di­tion­ing in the car depletes the bat­tery and reduces its range, which makes it a less attract­ive pro­pos­i­tion. And issues to do with the sheer size of the coun­try — huge swathes of the rur­al areas of the coun­try don’t even have access to basic elec­tric grids, let alone some­thing exot­ic like a charge point.

All of these are factors make it more dif­fi­cult for people to use these elec­tric vehicles. It is still unclear how these EVs per­form in these set­tings and wheth­er they are serving con­sumers’ needs. India also relies heav­ily on coal and oil to power much of its grid, lim­it­ing the pos­it­ive impact of elec­tri­fic­a­tion on emis­sions. The poten­tial is enorm­ous, but the scale of the prob­lem makes it really dif­fi­cult to make an impact.

There’s an awful lot of research focus­ing on this ques­tion of trans­ition at the moment. What’s emer­ging is that hav­ing a new tech­no­logy, no mat­ter how robust it is, will not, in itself, offer a solu­tion. The adop­tion of the tech­no­logy is very cul­tur­ally and loc­a­tion­ally spe­cif­ic. It’s about phys­ic­al struc­tures, cli­mate, envir­on­ment, reg­u­la­tions, and most import­antly, how people live their lives.

This shines a light on the dearth of research emer­ging from India itself. A lot of research is inwardly focused — it looks at North Amer­ica, Europe, and increas­ingly China. I think that’s a con­cern, because we know that trans­itions in gen­er­al don’t work in the same way in those places.

Marianne Guenot