Electric Vehicles are on the move! But there are roadblocks ahead.

Sales of EVs have grown at a rate of 74.07% CAGR from 2019 to 2023.

Electric Vehicles have become the rage in the last decade throughout the world. In fact, the bestselling car in the world in 2023 is Tesla’s Model Y, an EV. But its sales in India have lackluster for the better part of the last decade. It seems to be changing rapidly in the past couple of years. In 2019, the total EV sales in India stood at a paltry 1.6 lakh vehicles. It increased by almost 10-fold by 2023 when it sold over 15.3 lakh vehicles with 2024 having a promising start with close to 5 lakh vehicles selling in the first 3 months. Here’s a chart showing the EV unit sales over the past few years.

 

What do the numbers tell us?

EVs have been increasing so well that the CAGR from 2019 to 2023 stands at a whopping 74.07% and the sales have increased by almost 50% in 2023 compared to 2022. In the first 3 months of 2024, EV sales have increased by 141% than the sales in the first 3 months of 2023. In each of the last 5 years, the sales of EVs have been higher than the preceding year. Especially in 2022, the number of units sold have considerably increased from the previous year. In March 2024, there is a big spike in sales to over 2 lakh units for the first time ever. This sharp increase in sales is due to the sales push by the EV makers as the FAME-II subsidy scheme ended on March 31st 2024 and customers were incentivized to buy their EVs before the subsidy ran out. That marks the long list of challenges faced by EVs.

 

Challenges faced by EVs:

Subsidies:

FAME is the abbreviation for the scheme “Faster Adoption & Manufacturing of Electric Vehicles” which was launched with to speed up the switch to EVs. Phase-I of the scheme was launched in 2015 and Phase-II was launched in 2019 ending on March 31st 2024, with a budget of ₹10,000 Crores. From 1st April, the Union Government has launched Electric Mobility Promotion Scheme (EMPS) with a funding of ₹500 Crores which is slated to last till end of July 2024 after which the Government is expected to come up with the FAME-III scheme in the budget that would be tabled post Lok Sabha Elections. With the Inflation Reduction Act 2022, the United States of America has ensured a subsidy of $7,500 (₹6.25 Lakhs) per electric vehicle till 2032. Apart from these tax credits at a Federal level, there are subsidies at the State level too. These subsidies extend to charging, solar installations etc. Despite its attempts with FAME subsidies, India does not have a robust support system like that of the US and other countries for promotion of EVs. We can only hope that the Government will wake up and make a significant change in that regard.

Charging Infrastructure & Charging Time:

Since the adoption of EVs are in its nascent stage, the charging infrastructure for the EVs are not adequately developed. Hence, the masses are hesitant to make the switch as they worry about running out of charge with no access to charging. The phenomenon has a name for itself, range anxiety. The range anxiety prevents people who take long trips/commute from opting for an EV. Even in the routes that have charging stations, the trips usually take longer as the charging time often runs more than an hour and the charging speeds are at 50kW at best compared to 250kW or 350kW in the developed countries. With more charging stations and increased speeds of charging, the range anxiety would soon be an issue of the past, but we are not there just yet.

Vehicle Cost:

Electric Vehicles, be it motorcycles or cars, are significantly more expensive than their petrol counterparts and in most cases costlier than diesel cars as well. The EVs have not reached the Price Parity yet and it is proving to be a prohibitive factor for a vast majority of consumers in a price sensitive market like India. Without subsidies, EV adoption would be significantly slower than what they are today. Even with all the subsidies, the costs are not too practical for many buyers as far as sticker price of the vehicles are concerned. With the potential savings in running costs and maintenance costs, the EV may be cheaper in the long run, but these calculations and predictions are for the enthusiasts and not for the everyday consumers. Once the price parity is achieved, the EV sales would take off a lot faster than today.

Reputation:

EVs have gained a bad reputation among the masses. Most of it are demons from the past as there was a phase in the end of 2000s and early 2010s when the ‘first wave’ of electric vehicles (mostly scooters) entered the markets which turned out to be duds with range of 40 kms and would clock a max speed of 30-40 kms. These had bad build quality and a very short lifespan which ranged from a couple of years at best to just few months at worst. In addition to this, some incidents of Electric Scooters catching fire have created fear amongst many that EVs are unsafe which dented the image even further. The increasing sales are an encouraging sign that people are moving past these issues, but the predominant belief is still against electric vehicles.

EVs are inevitable:

Despite all these challenges and shortcomings of EVs in some aspects at the moment, EVs are here to stay and they would be norm sooner rather than later. As the economies of scale improves and when cost parity is achieved, it would soon become a question of whether one can afford not to buy an EV from the present scenario where one wonders whether he/she can afford EV. With the falling prices, improving range, faster charging speeds and lower charging time; EVs could soon sell multiple times more units than what they sell today.

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Ramasamy Jayaprakash

Ramasamy works as a Senior Sub-Editor at YouTurn and writes articles in Tamil and English. He also makes videos for YouTurn's Tamil & English YouTube channels.
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