For the electric vehicle sector to thrive, policy and market synergy is essential

Most of the state governments have introduced EV policies which have also played a key role in strengthening the manufacturing ecosystem and adoption of electric mobility. Many of these policies in conjunction with FAME-II have offered additional incentives like purchase subsidies, road tax exemptions, benefits on setting up charging infrastructure etc. With these efforts, in the case of Delhi, EV penetration has reached 11% of the total new registrations in 2023. Various initiatives have been raising public awareness and educating consumers through campaigns on the environmental and operational economic benefits of EVs, thereby increasing consumer interest and acceptance.

As per TERI analysis, India could achieve a 6% reduction in greenhouse gas emissions from the transport sector by achieving 30% of new vehicle sales to electric by 2030. Electric vehicle penetration is undergoing a significant transformation, particularly in the electric two- and three-wheeler and bus segments, which have proven their worth with 5%, 53% and 5% of new registrations as electric vehicles in 2023, respectively. However, other segments, particularly passenger cars and commercial vehicles, are lagging behind and policy and market synergy are required to strengthen these segments.

To reduce import dependency and boost the domestic EV sector, the government has launched a Production Linked Incentive (PLI) scheme for the auto and auto component sectors, as well as for advanced cell chemistry manufacturing capacity. The scheme provides financial incentives to manufacturers based on their sales growth and aims to attract investments in the EV supply chain, including battery manufacturing. Indigenisation of battery pack manufacturing along with reduced costs in the future will further help overcome the cost barrier.

The anticipated adoption could not reach its full potential as only 68% of the total allocation was utilized under FAME-II. Areas for improvement on the EV supply side include utilization of critical minerals in batteries and motors, emissions generated during EV manufacturing, limited localization of battery manufacturing, and handling and recycling of end-of-life batteries, which require measures to ensure resilient and secure supply chains. Continued support and collaboration between government, industry and other stakeholders will be crucial to realize the vision of an electrified road transport sector.

Akshaya Paul, research associate; and Sharif Qamar, research associate and deputy director, The Energy and Resources Institute (TERI)

(Disclaimer: The views expressed above are the author’s own. They do not necessarily reflect the views of DH.)