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Value-Creation And Market Competition To Pump Up India’s EV Demand

Value-Creation And Market Competition To Pump Up India’s EV Demand

EV sales had just 2.9% penetration in the total automobile market in India in 2019

India lags behind on production and adoption of electric vehicles

Norway is the only country with critical mass in terms of EV adoption

The adoption of clean mobility has been a central tenet for sustainable development for over two decades. In June 1992, 178 countries around the world adopted Agenda 21—a comprehensive plan of action to build a global partnership for sustainable development to improve human lives and protect the environment, during the Earth Summit at Rio de Janeiro, Brazil.

The follow up to this meeting in New York in 2005, where seventeen sustainable development goals (SDG) were adopted, is widely considered to be the modern-day blueprint for clean mobility, green energy and sustainable development. The adoption of clean energy, sustainable cities and communities would require the availability of robust clean mobility infrastructure where electric vehicles will play a crucial role.

In order to curb down air pollution and adhere to the Paris agreement of 2015, India has taken several proactive steps to catalyse the adoption of electric vehicles among the public at large. Electric vehicles (EV) startups in India are at the forefront of India’s clean mobility dream. As per our latest report on the EV market in India, the EV startups have raised combined funding worth $601 Mn between 2014 to 2019. The capital inflow in Indian electric vehicles had surge 3.2x between 2018 and 2019, indicating the growing investor confidence towards this sector as we approach closer to the SDG deadline— 2030.

Despite such proactiveness and speculations, the current state of the EV market in India is relatively nascent on a global scale. The unavailability of inadequate charging infrastructure, range anxiety, purchasing price and tech readiness of the Indian public remain major hurdles procrastinating adoption of EV by a critical mass in the country.

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India vs The World: Market Adoption Of Electric Vehicles

Electric Vehicle Adoption In India

In FY 2019, the total EVs sold in India accounted for a mere 2.9% of the total automóbiles sold in the country the same year, compared to China’s 4.7% penetration. Taking into consideration the numbers of units sold, China witnessed 59% higher EV sales compared to India. Contrary to both India and China, Norway which is by far the only country in the world to reach a critical mass in terms of public adoption of EVs, witnessed 42% share of electric vehicles in total automobile sales for the year 2019.

The Role Of Human Capital

Norway being a developed nation has major human capital advantages over developing countries like China and India. One way to quantify this is by looking at the Human Development Index of the three countries— Norway, China and India.Electric Vehicle Adoption In India

In addition to this when we take into consideration the teach readiness of the consumer market in these three nations, Norway shines brighter again. As per Cisco Global Digital Readiness Index 2019, which measures a country’s readiness towards digital technology gave Norway a score of (17.9 out of 25) whereas China and India scored 13.22 and 9.46 respectively. Based on this score Norway ranked 10th globally in terms of digital readiness whereas China ranked(54th) and India—101.

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What India Can Learn From Market Leaders

In order to conclude the inputs, India can take from Norway’s EV adoption story, first, we need to understand the persona of EV buyers in the country.

Electric Vehicle Adoption In India

The top five reasons for purchasing an electric-powered vehicle in Norway are — availability of adequate changing infrastructure and maintenance of the vehicle, superior technology, ample space, power/acceleration, and safety. Another important aspect to notice in the Norway market is that the EV sales are highly dominated by the non-domestic players — Tesla, Volkswagen and Nissan remain popular options among the Norwegian people.

Overall, it is clear that the value creation by EVs in Norway is high. This can be ascertained from the fact that when Norwegian EV buyers were asked whether they compared the electric vehicle with internal combustion engine models before making the purchase, a whopping 72% of the public said “NO”.

Considering the fact that the overall economic and social structure of Norway is relatively more formal than that of India, some aspects such as price, quality of battery and battery replacement cost might have higher weightage in the minds of Indian consumer compared to their Norwegian counterparts. But few important lessons which India can learn from Norway’s EV success story are— the establishment of better-charging infrastructure, improving the value creation of EVs in people mind by educating the potential buyers about its advantages and allowing international players have a level playing ground in the country.

Out of these three, the last one is most crucial since international players will tend to drive competition. The fact that India does not have superior expertise on the production front, allowing more foreign players to compete will create a healthy demand in the market along with giving consumers a plethora of choice. In the long run, this will also give a boost to the overall transition from combustion to electric engine vehicles in India. In the past, the formal automobile industry in India took off exponentially after the liberalisation (post-1992) of norms in the context of foreign operations.

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https://inc42.com/datalab/lessons-from-china-why-battery-recycling-is-crucial-for-ev-growth-in-india/
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