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India, one of top three auto markets, is short of EV buyers

Consumers are back and willing to spend on electric vehicles in India, but the infrastructure to support the sector is lagging. Hybrids could be the answer

January 19, 2023 / 04:35 PM IST
Tata Motors' Harrier electric vehicle (EV) was unveiled at India Auto Expo 2023 in Noida, Uttar Pradesh on Jan 11.

Tata Motors' Harrier electric vehicle (EV) was unveiled at India Auto Expo 2023 in Noida, Uttar Pradesh on Jan 11.

India is now among the top three auto markets in the world. A feat indeed, but it’s being driven by internal combustion-engine cars even as global pressures force a pivot to cleaner electric vehicles.

Over 4 million four-wheel vehicles were sold in India last year, surpassing Japan and coming in behind China and the US. That’s a stunning reversal from almost eight months ago, when sales tanked to a decade-low and swathes of production capacity lay idle. Now, with the economy growing at a fast clip, car buyers are back and willing to spend. While the broader market is largely made up of motorbikes, where the cost of ownership is low compared to larger autos, aspirational Indians are edging into the passenger segment. Bigger, sport utility vehicles are now a larger portion of the mix, too.
To nudge India’s cost-conscious drivers and in keeping with the green hype, automakers released a slate of glitzy EVs this month at the country’s largest motor show, India Auto Expo, with promising announcements from domestic and foreign manufacturers like China’s BYD Co. and Kia Corp. Trouble is, owning one of these newly released four-wheeler EVs is an exciting prospect for buyers headed to showrooms — but once they get there, the economics are a little more tricky.

Not So Electric | Sales of electric vehicles in India only account for a small portion of the auto market

India’s electric success has been limited to its two-wheeler, or 2W, market. And, it won’t be easy to replicate for larger vehicles. That’s because the economics of 2W electrics work well in the country: The powerpacks are smaller and therefore, cheaper, a growing trend towards battery-swapping has cut out range anxiety and charging is increasingly available. Meanwhile, owning an electric motorbike has become an affordable proposition, because gas prices no longer impact the daily household bill. Those savings go a long way. Additional government incentives are also helping.
The rise of 2W electrics is akin to that of compressed natural gas cars in India. Cost savings and regulation pushed drivers to adopt these vehicles. The favorable economics mean that people are willing to wait to fill up — it isn’t uncommon to see long lines of cars queuing to replenish their tanks. People won’t complain about the delays if it’s better for their budgets.