India’s transition to electric vehicles

Peter Wells. India as a whole has done pret­ty well in adopt­ing elec­tric vehi­cles, but there’s plen­ty of scope to do more. The coun­try acknowl­edged ear­ly on that there were oppor­tu­ni­ties for gain with the tran­si­tion, notably when it comes to reduc­ing the health effects of air pol­lu­tion and noise. Accord­ing­ly, they have been sup­port­ing this change since 2015, notably with the Faster Adop­tion and Man­u­fac­tur­ing of Hybrid and Elec­tric Vehi­cles (FAME) sub­sidy scheme that sup­ports the pur­chase of elec­tric vehi­cles and instal­la­tion of charg­ing points and pur­chase of elec­tric pub­lic transport.

Still, at the moment, it is lag­ging behind its ambi­tions. By 2030¹, the coun­try aims for 30% of pri­vate cars, 40% of bus­es, and 80% of two-wheel­ers and three-wheel­ers to be elec­tric among new pur­chas­es as part of a push to reduce over­all emis­sions by 45% by 2030. As of now, elec­tric vehi­cles make up about 50% of 3‑wheelers (the so-called “tuk tuk” vehi­cles), about 5% of 2‑wheelers, and 2% of cars bought in 2024. I think most exter­nal peo­ple look­ing at this would say that’s far too ambi­tious as a target.

Alto­geth­er, India, is a bit behind oth­er major mar­kets like Chi­na, which is now a sig­nif­i­cant leader in both mar­ket pen­e­tra­tion and as a loca­tion for pro­duc­tion. But it is ahead of oth­er com­par­a­tive mar­kets like Brazil, for instance.

The mar­ket has his­tor­i­cal­ly been pri­mar­i­ly dom­i­nat­ed by com­mer­cial vehi­cles and a strong pref­er­ence for two-wheel and three-wheel vehi­cles. These are hard-wear­ing vehi­cles used in com­mer­cial set­tings like taxi ser­vices and the like — just how per­for­mant EVs will be in that set­ting is still up for debate². Long charg­ing times, high own­er­ship costs, and lim­it­ed range can increase³ the risks for busi­ness own­ers invest­ing in this new technology.

India has man­aged to dri­ve some elec­tric sales among two and three-wheel­ers, but it’s cer­tain­ly not tip­ping the mar­ket over. That being said, this has led to some inter­est­ing leapfrog­ging, like the emer­gence of bat­tery-swap­ping points that allow dri­vers to pow­er up their two and three-wheel­ers with­out delay.

That sys­tem is still strug­gling to find its feet, notably because of a steep learn­ing curve when it comes to the rate of degra­da­tion of bat­ter­ies, how quick­ly they can be charged, con­sumer edu­ca­tion, but also elec­tric­i­ty rate nego­ti­a­tions, sub­si­dies, and so on. But it is show­ing promise as a way to meet com­mer­cial dri­vers’ demands. Still, we’ve been see­ing a sig­nif­i­cant trans­for­ma­tion of the car sec­tor in the last 10 to 15 years, with a grow­ing inter­est for per­son­al cars.

We’ve been see­ing big glob­al pro­duc­ers like Toy­ota, Suzu­ki, Nis­san, and Hyundai set­ting up man­u­fac­tur­ing hubs in India​.Car man­u­fac­tur­ers glob­al­ly are find­ing them­selves hav­ing to adapt to volatil­i­ty of demand and grow­ing geopo­lit­i­cal insta­bil­i­ty. In that con­text, it’s becom­ing increas­ing­ly cru­cial for them to be able to quick­ly to adapt to unex­pect­ed short-term hits, which are dif­fi­cult to forecast.

India, which touts man­u­fac­tur­ing costs 10–25% low­er than oper­a­tions in Europe and Latin Amer­i­ca, is becom­ing part and par­cel of that very com­plex and con­stant­ly shift­ing struc­ture. Still, inter­na­tion­al man­u­fac­tur­ers implant­ed there are equal­ly inter­est­ed export­ing these cars to Asia and Europe than in devel­op­ing their foot­print in the coun­try — which still has a rel­a­tive­ly small but grow­ing elec­tric car mar­ket, com­pared to its population.

Part of the sto­ry is that India has been quite busy build­ing some walls to pre­vent the Chi­nese car from flood­ing the mar­ket, so they’ve imposed sub­stan­tial tar­iff bar­ri­ers against fin­ished vehi­cles com­ing into the mar­ket and insist that com­pa­nies want­i­ng to work with India do so with a local partner.

India’s new EV pol­i­cy, the Scheme for Man­u­fac­tur­ing of Elec­tric Cars pol­i­cy, which low­ers import tax­es on 8,000 elec­tric cars per annum for automak­ers⁴ invest­ing at least $500 mil­lion in man­u­fac­ture in India that uses 50% of com­po­nents sourced local­ly. In this con­text, local man­u­fac­tur­ers like Tata Motors and Mahin­dra are becom­ing sig­nif­i­cant play­ers and could become more so in the future.

The real­i­ty of it is that sub­stan­tial bar­ri­ers to suc­cess are still in place, which elec­tri­fi­ca­tion will not solve. For instance, many Indi­an cities suf­fer from a lack of park­ing, which means dri­vers will often dip back into traf­fic after drop­ping off their pas­sen­gers and dri­ve around with an emp­ty car until they can pick them up again. Poor rail­way net­works mean many will trav­el into town on three-wheel­ers, con­tribut­ing to cities’ con­ges­tion prob­lem. Address­ing these infra­struc­ture issues would already go a long way towards reduc­ing emis­sions before EVs even come into play.

Then you’ve got the cli­mate issues — run­ning air con­di­tion­ing in the car depletes the bat­tery and reduces its range, which makes it a less attrac­tive propo­si­tion. And issues to do with the sheer size of the coun­try — huge swathes of the rur­al areas of the coun­try don’t even have access to basic elec­tric grids, let alone some­thing exot­ic like a charge point.

All of these are fac­tors make it more dif­fi­cult for peo­ple to use these elec­tric vehi­cles. It is still unclear how these EVs per­form in these set­tings and whether they are serv­ing con­sumers’ needs. India also relies heav­i­ly on coal and oil to pow­er much of its grid, lim­it­ing the pos­i­tive impact of elec­tri­fi­ca­tion on emis­sions. The poten­tial is enor­mous, but the scale of the prob­lem makes it real­ly dif­fi­cult to make an impact.

There’s an awful lot of research focus­ing on this ques­tion of tran­si­tion at the moment. What’s emerg­ing is that hav­ing a new tech­nol­o­gy, no mat­ter how robust it is, will not, in itself, offer a solu­tion. The adop­tion of the tech­nol­o­gy is very cul­tur­al­ly and loca­tion­al­ly spe­cif­ic. It’s about phys­i­cal struc­tures, cli­mate, envi­ron­ment, reg­u­la­tions, and most impor­tant­ly, how peo­ple live their lives.

This shines a light on the dearth of research emerg­ing from India itself. A lot of research is inward­ly focused — it looks at North Amer­i­ca, Europe, and increas­ing­ly Chi­na. I think that’s a con­cern, because we know that tran­si­tions in gen­er­al don’t work in the same way in those places.

Marianne Guenot