India envisions an electric future by 2026

The Indian government has ambitious plans to electrify commercial road transport by 40 percent in less than a decade. However, there are still numerous challenges to overcome, with some arguing that this can’t be achieved. MARISKA MORRIS reports

The world has electricity on its mind as governments enforce stricter emission regulations and consumers demand more environmentally friendly products. According to Bloomberg New Energy Finance, electric vehicles (EVs) are expected to account for 57 percent of passenger vehicles sales by 2040.

However, not everyone is prepared to wait nearly two decades. The Indian government is fast tracking EVs through its US$ 1,4-billion (R20-billion) Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme. The regulations will require ridesharing or taxi services in India to electrify 40 percent of their fleets by April 2026.

The regulations will also apply to motorcycles and scooters used for deliveries, ridesharing and other commercial purposes. All two- or three-wheel vehicles sold after April 2025 will need to be electric. Passenger vehicles sold for commercial use after 2026 will also have to be electric.

The Indian government is taking the lead with the FAME scheme by offering cities incentives to include electric buses in their public-transport system with a US$ 360-million (R5,3-billion) subsidy for 5 000 electric buses to be distributed in 40 cities. The cities must indicate the number of buses to be deployed and ensure that each bus runs for at least 500 000 km.

Another condition of the subsidy is that the manufacturer of the electric buses must be an Indian company with local manufacturing facilities. Despite the Indian government’s ambition and investment, there are still many challenges preventing the adoption of EVs, with cost and infrastructure being key.

Part of the reason for the expected wide adoption of EVs by 2040 is the decline in cost of these vehicles. Bloomberg analyst Allen Tom Abraham, in an article by Quartz India, notes that the majority of fossil fuel-powered passenger vehicles sold in India cost less than US$ 8 000 (R118 129).

In comparison, the EVs available in India, with a range of only 110 km, cost between US$ 8 637 (R127 424) and US$ 18 714 (R276 094), according to an article by Rohan Seth for The Hindu.

Abraham notes in the Quartz India article: “Even with the steep fall in battery prices, we do not expect highway-capable EVs with a range of 200 miles (322 km) to achieve upfront cost parity with these low-priced vehicles before 2030.”

A big contributing factor in the expected affordability of EVs is the declining price of lithium – an important material in the batteries used to power EVs. While India would be less concerned with fluctuating fuel prices, it will have to import lithium as the material is concentrated in Chile, Australia, Argentina and China.

Depending on the cost of importing lithium, or lithium batteries, the price of EVs in India might not be competitive in the near future. There are other ways of overcoming the cost when considering two- and three-wheel vehicles.

“The smaller battery sizes can open up opportunities for innovative business models like battery swapping and leasing, which can make these vehicles more appealing to customers in the next five to ten years,” Abraham says, as quoted by Quartz India.

The cost of EVs in India can be further impacted by the variety available in the market – especially since there are only a handful of local manufacturers. Limited variety will impact consumer satisfaction and affect competitive pricing. With 60 to 100-percent taxation on imported EVs, there are few opportunities for international manufacturers without plants in India to supply to the country.

Local two- and three-wheel vehicle manufacturers also voiced their concern over the “unrealistic” expectation to comply with the scheme’s regulations.

Venu Srinivasan, chairperson at TVS Motor Company, is quoted in an article by The Hindu: “To force an unrealistic deadline for mass adoption of electric two and three-wheel vehicles will not just create consumer discontent, it risks derailing auto manufacturing in India that supports four-million jobs.”

A final obstacle for India is the current availability of charging stations across the country. The Indian government is involved in talks to establish its own standards for charging stations with the aim of making it cheaper to build and operate so that the number of stations can be increased.

Even if the standards succeed in increasing the number of charging stations, the available technology still requires long waiting times at the stations as the vehicle recharges.

Although there are many benefits to India considering an electric future for its commercial road transport, the deadline set by government might be unrealistic and have dire consequences for the market.