A report released Thursday by Arthur D. Little, a management consulting firm suggest that India's EV startup ecosystem which attracted FDI worth $ 6 billion in 2021 could get up to $ 20 billion by 2030.
The report, which does not include investments made by OEMs in the segment, and entitled - 'Unlocking India's electric mobility potential' suggests that over 30 percent of the vehicles sold in India will run on electricity by 2030, with sales crossing 10 million by 2030.
However, EV adoption for passenger vehicle segment is likely to be a mere 10 percent by the end of the period, amounting to 5 percent of total EV sales. To attain more than 30 percent EV adoption, India will require approximately 800 GWh of batteries by 2030. To meet this rising demand, India is accelerating plans to manufacture Li-ion cells within the country, anticipating $2.3 billion in government subsidies and over $ 7.5 billion in investment potential.
The study cites several factors for the low adoption of passenger EVs in the country which includes higher upfront costs compared to traditional vehicles, lack of models on offer, dearth of charging infrastructure (charging stations, battery swapping centres, chargers, and the entire supporting ecosystem), low consumer confidence in the product driven primarily by range anxiety, and exacerbated by product safety mishaps. It recommends that the private sector and the government should work together to remove these barriers, and help India lift its EV game.
Barnik Chitran Maitra, Managing Partner & CEO, India & South Asia, Arthur D. Little, said, "Despite the obstacles, India is one of the largest markets for EVs in Asia behind only China and, surprisingly, ahead of Japan. We can build on this position by acting to support product innovation, create reliable charging infrastructure, and provide subsidies to buyers and additional incentives to startups involved in battery R&D, among others. If India achieves its true EV potential of 50 percent electrification, every 10th EV sold globally could be manufactured in India, making India a global EV powerhouse."
The study also recommends 10 imperatives for India to unlock its true potential towards EV adoption where OEMs need to focus on product development, component manufacturing, secondary offerings and after-sales service. Secondly, suppliers need to build capability since the localisation of components will be essential to reduce cost. Energy companies, on the other hand, should press to work towards better power generation and distribution, apart from the development of required charging infrastructure and enabling the grid to manage the requisite loads. On the government's part, the study suggests that it must make it as conducive as possible for EV adoption through encouraging policies, and customers, who are more aware and concerned today about sustainability, reducing their carbon footprint, and protecting the environment, which will only enable the sector to grow.
Besides benefits of a cleaner environment, India's import bill is also expected to come down by almost $ 14 billion in 2030 itself. Apart from this, the adoption of EVs is expected to create 10 million jobs in India by 2030, the report said.