Industry Overview

The India National Electric Mobility Mission Plan 2020 predicts 5-7 million electric vehicles
(electric vehicles) will be on the roads by the end of 2020. The unsaturated, growing demand for
personal passenger cars coupled with low hybrid/ electric penetration, high oil price forecasts
provides an opportunity for electric vehicles in India.
However, the fact that any potential fuel savings do not sufficiently compensate a consumer for a
high purchase price restricts the demand for electric vehicle passenger cars. Unless renewable
energy is used to power electric vehicles, India will not face the emission-reduction case.
India's demand for crude oil is outstripped by its consumption as the transport sector accounts for
1/3 of crude oil consumption and road transportation accounts for over 80% of its usage. The
NEMMP predicts around 90% of crude oil will be imported by the year 2020. Electric
transportation can help lever the reduction of carbon footprint in India with the use of crude to
stimulate energy intensive projects.

The ever rising cost of petroleum will transition a shift to fuel efficient vehicles. Consumers have
already started becoming more sensitive to fuel economy by switching to hybrid cars, fuel
efficient internal combustion engines and electric two wheelers; while the government have
moved towards fleet of electric/CNG hybrid vehicles. Any increase in fuel prices will further
strengthen the case for clean, hybrid mass-transport substitutes and push the increase in
demand for hybrid /electric vehicles.
The Indian demand in the electric vehicle market is weak in comparison to the global market. The
growth of this sector faces many obstacles like high investment and service anxiety around
maintenance/re-charging facilities. The electric vehicles cannot be compared to a typical indian
car in terms of size and functionality. The upfront costs of electric vehicles are too high in
comparison to fuel efficient substitutes and hence cannot be recovered by fuel savings over the
period of ownership.
Sales of 130,000 hybrid/electric vehicles have been recorded in 2012, according to media reports
with most of them (97-98%) being two wheelers. In the four wheeler market, the investment
behaviour in hybrid/electric vehicles is poor. The costs associated with the energy storage

technology needs to decrease in order to make the electric vehicles compete with fuel efficient
vehicles financially.
With sales only growing by 6% over 2008-2012, the NEMMP target of 5-7 million electric vehicles
by 2020, seems very ambitious as it corresponds to 19% penetration of electric vehicles in
passenger car markets

The Government of India initially had implemented a subsidy scheme to promote the purchase of
electric vehicles. However, the lack of growth in the industry led to the withdrawal of these
subsidies in 2012 which in turn led to a major decline in electric vehicle sales.

There are many short term changes foreseen as several global manufacturers like BMW, Toyota,
Honda etc are either already in the market or planning to launch hybrid electric vehicle passenger
cars in India in the near future.
Grid electricity will play a more important role as there is an absence of captive power generation
for charging hybrid/electric vehicles. Renewable energy must be pursued in order to curtail the
emissions. Furthermore, the improvement of grid infrastructure to reduce transmission losses
(24% currently) will be essential to stimulate the growth of hybrid/electric vehicles.
A combination of government coordination and political will is required to build an infrastructure to
support the electric vehicle infrastructure. This development is comparable to the capitalintensive experience of ATM banking services in India and telecommunications. The growth in

the hybrid/electric automobile segment will lead to subsidising of some of the infrastructure
related to charging of these vehicles.