Author:Mr. Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Ltd and Tata Passenger Electric Mobility
India is the world’s fastest growing major economy, with a GDP growth rate of 7%, and is seen as a bright spot for global economic revival1. India is expected to continue this growth momentum to become the 3rd largest economy, with over $5 trillion GDP in the next 3-4 years2. India’s 1.4 billion population has a median age of around 28 years, creating a unique demographic bounty that can drive both consumption and production, and become the world’s engine for growth. India’s growing prominence in the global stage was also evident in the historic 2023 G20 Presidency, where India played a key role in setting the agenda for this decade, particularly in combating global climate change.
In the aftermath of COVID-19 pandemic, there has been renewed focus on the need to address global climate change. Carbon dioxide emissions are the primary cause of rising atmospheric temperatures, resulting in global climate change. Studied by the US EPA show that 65% of global carbon dioxide emissions result from the combustion of fossil fuels3. As a result, most major nations have declared “Net Zero” emissions target dates and have enacted regulations to promote or mandate zero emissions technologies, particularly in the transportation and energy sector. The recently concluded COP28 in Dubai also raised a historic call to “transition away from fossil fuels4, as an imperative for achieving net zero emissions by 2050. It would not be an overstatement to say that accelerating the transition to zero emissions technologies will be a primary theme around the world for the next 5 years.
The drive to zero-emissions is strongly supported by the Government of India. The Prime Minister had made a historic commitment at the COP26 summit to reduce India’s carbon intensity by 45% by 2030 and reach net zero by 20705. Currently, India has very low per capita carbon emissions, driven by low penetration of energy-intensive goods and vehicles. With a fast-growing economy and a growing aspirational middle class, there will be growing affordability for goods and services. For example, over the next 5 years, India will see an addition of over 20 million cars & trucks and over 80 million two-wheelers. Incremental emissions from these vehicles would pose a significant challenge if they were all fossil fueled. In addition, crude oil imports account for 60% of India’s current account deficit, and fossil fuel growth will have an impact on India’s growth.
According to global studies, EVs have zero tailpipe emissions and the lowest lifecycle carbon emissions across all available automotive powertrain technologies6. With India’s solar power capacity expected to quadruple to 293 GW by 20307, lifecycle greenhouse gas emissions of EVs are projected to be 30%-63% lower than their gasoline counterparts8. With innovative solutions such as solar rooftops, and open access renewable power for charging stations, EV usage can become completely carbon neutral as this ecosystem develops. Therefore, the agenda for the next 5 years would be to focus on accelerating the adoption of EVs.
Over the last 4 years, India has a rapidly grown an EV market, with over 2 million electric 2 wheelers , 3 wheelers and cars currently on Indian roads. There is a strong aspiration for EVs in select pockets of India, with 70% of tier-one Indian car customers contemplating electric cars for their next vehicle, surpassing the global average of 52%9. The central government has implemented a strong set of initiatives for the promotion of EVs, through GST reduction, FAME II incentives, and PLI schemes. State governments have also supported with road tax and registration waivers, and by establishing charging infrastructure through Discoms. However, given India’s late start in EVs, EV penetration is still only about 2% in cars, and about 5% in 2Ws, and EVs are just entering mainstream adoption.
By 2029, India should target for 25-30% adoption of EVs across categories, which would mean an annual demand of 1.5-2 million cars and 4-5 million 2 wheelers. Developing a local supply chain for EVs would create a scale manufacturing base in India, which could become a global export hub as well. The Ministry of Skill Development and Entrepreneurship estimates that the EV industry can create 1 crore direct jobs and 5 crore indirect jobs by 203010. In addition, India will generate valuable intellectual property in EVs and components, which can trigger a wave of innovation and seed new industries in the country.
The path to 30% EV penetration in new vehicle sales requires significant mainstream adoption of EVs. Customer studies indicate that awareness and accessibility of charging infrastructure is the primary hurdle for EV adoption11. While 90+% of current EV owners charge at home in their own private parking space, not all vehicle owners in India have their own covered, private parking space. Mass deployment of chargers across residential and commercial buildings, to ensure that at least 10% of parking lots are electrified will drive greater consumer confidence in charging availability and accessibility. The government, municipalities, property owners, charge point operators and OEMs should come together to drive this growth over the next few years.
In addition, there is also a need for creating greater awareness of EVs among customers and policymakers. While EV prices will reach parity with ICE vehicles over the next several years, myth busting is necessary to allay unfounded concerns, and drive mainstream adoption of EVs. Government, OEMs, media and EV owners should collaborate to drive this over the next few years. In addition, EV adoption should become a key aspect of sustainability strategies of all major corporates.
In summary, transitioning to zero emissions technologies to combat climate change is a global imperative over the next 5 years. By focusing on accelerating EV adoption in India, India can become a global leader in the fight against climate change. In the process, India can also become a global hub for
Published: 18 February, 2024 | Business Today
