Electric Vehicle Industry in India

India wants to increase its electric vehicle count to 6-7 million vehicles by 2020, which seems highly unrealistic with the current state of technology and funding in the country. While globally, the entire EV industry plans to have 20 million vehicles by that time, India wants 6-7 million vehicles. The government wants to allocate Rs 1000 crore for the next 2 years in providing subsidies and support to R&D for this industry.

However, the target seems inordinately ambitious. EV industry is still in its infancy, despite more than 100 years of development. With falling oil prices, this target looks even more unrealistic. However rapid strides have been made in reducing battery costs, increasing range and improving charging times for EVs. India also has huge issues as it does not have any domestic manufacturing infrastructure. EV industry needs a lot of pieces in place such as EV charging stations, domestic battery manufacturing etc. While Mahindras have made a start by buying Reva, it is not a match for the EVs made by the Teslas and Chevys of the world. India is way behind in EV technology as well as battery technology. India will have to import most of the EVs and their supporting infra. Given that EVs are around 50% more expensive than conventional engines, I don’t think India will import too many EVs. The average purchasing power is very low in the country and vehicle ownership is extremely low and skewed towards vehicles with a low price tag.

I think India would be better off supporting more mature technology in the green energy space, where costs are more competitive and availability is higher. It will get more bang for the buck, which is particularly important for a resource constrained country like India.