The year 2020 will be marked as the “Black Swan Event” in India’s history with the sudden outbreak of the coronavirus pandemic. The Covid 19 impact on the electric vehicle industry has introduced unexpected complications in the electric vehicle market. It has become challenging for EV manufacturers to achieve their sustainability goals and go ahead with the post-pandemic trends in the electric vehicle industry competition. In recent studies, experts have analyzed that the COVID 19 outbreak has reduced electric vehicle sales temporarily, but the future of electrification of vehicles is quite radiant. Whether it is 2-wheeler battery packs EV or 3-wheeler battery packs EV, or 4-wheeler battery packs EV, the electric vehicle manufacturers are all set to revive and beat the great depression caused after the pandemic.
In 2020, the Indian Electric Vehicle (EV) market size was valued at USD 5 billion which is anticipated to reach USD 47 billion by 2026 with a CAGR of above 44 per cent. The Indian electric vehicle market forecasts a magnificent growth rate with several government initiatives and policies. The pandemic has disrupted the potential supply chain of electric vehicles along with the EV batteries and has also weakened the investment sentiment among people. The continuous lockdown has pushed the EV manufacturers to halt their manufacturing units. The Indian EV component firms had already cut production by up to 40 per cent to 50 per cent to control inventories due to dwindling demand. The tremendous job losses and pay-cut have shrunk the purchasing power of the customers.
The government inducement towards relief packages in the future could help the EV market get through an economic crisis brought by COVID 19. As per government think tank Niti Aayog, EV manufacturers may suffer a delay in production as their initial focus will be to reviving demand and producing Bharat Stage-VI vehicles, and curbing imports of Chinese EV components. According to a report, electric vehicles registration has declined by 20% in 2021. The 2-wheeler battery packs EVs have witnessed a decline of 6 per cent. The 3-wheeler battery packs EVs have experienced the maximum impact of the pandemic with a fall of 37 per cent in sales as compared to 2020. However, a growth of 54 per cent has been noticed in the registration of vehicles with electric bike batteries from the year 2020 to 2021.
So here, we have further discussed the long-term goals of the Indian government to overcome the EV manufacturers’ crises after the Covid 19 pandemic.
The Long-Term View of Government towards EV Market Growth
The electric vehicle (EV) market in India is at a budding stage. With the introduction of government initiatives and policies, it is expected to accelerate its growth rate.
1. The introduction of the “Faster Adoption and Manufacturing of Hybrid and Electric vehicle” (FAME) scheme by the Union government was launched in 2015 to promote eco-friendly vehicles. The scheme had encouraged EV battery manufacturers in India and the EV production companies to produce more EVs in the country. This will further help to lessen the import dependency. The Fame India 2021 Scheme provides subsidies to approximately 7,000 e-Buses, 5 lakh 3-wheeler battery packs EVs, 55000 4-wheeler battery packs EVs, and 10 2-wheeler battery packs EVs. This eco-friendly public transportation system has also helped India to conserve renewable sources of energy and lower pollution levels.
2. The Indian government has lessened the GST from 18 per cent to 5 per cent on EV charging services and battery swapping services. It has also reduced GST from 18 per cent to 5 per cent on the purchase of Lithium-ion batteries in the battery replacement and swapping market. Moreover, the government has granted a subsidy scheme of INR 400 billion for Indian EV battery manufacturers. Thus, it will help to achieve the economies of scale and reduce EV costs too.
3. The government of India has also planned to develop and implement EV transition targets for taxi fleets and other logistics fleets in the states. India has already started with e-mobility for public transport and Amazon, an e-commerce company, has taken the initiative to use e-mobility for deliveries to curb pollution levels. Kerala has planned to place one million EV on the roads by 2022 and another 6,000 e-buses by 2025. Similarly, Telangana and Delhi have also set their powerful EV sales target till 2025 for private and public vehicles.
4. The Indian government is also concentrating on the formation of charging infrastructure for EVs. It has risen the total subsidy under the FAME-II scheme from INR 10 billion to INR 100 billion for not only constructing EV charging stations but also attracting private players.
India has taken various significant initiatives to boost the adoption of electric vehicles. However, with the sudden outbreak of the coronavirus pandemic, the EV industry is facing slower progress. The government’s notable initiatives mentioned above have stimulated the growth of EV and EV battery manufacturers in India.