India’s EV Push to Focus on E-Buses, Taxis, Three Wheelers

India’s efforts to support electric vehicles are likely to center more on public transport and “fleet operations” such as taxis and three-wheelers. This will be at the expense of private vehicles, according to our 3Q Global Electrified Transport Market Outlook.

“We remain optimistic on India’s e-bus market, but do not expect large numbers of passenger EVs to be sold until the latter half of the 2020s,” BNEF analysts wrote in the report.

India’s government, led by Prime Minister Narendra Modi, is currently finalizing the second phase of its program to encourage a higher uptake of EVs. The undertaking, known as the Faster Adoption and Manufacturing of Electric (& Hybrid) Vehicles program, will likely see 40 billion rupees ($600 million) spent in the next five years, with much of that going to subsidize e-buses by state transport companies and for charging infrastructure, according to BNEF.

As part of the next phase of the FAME program, subsidies for private vehicles will probably be withdrawn, underscoring the lack of impact they’ve had so far in stimulating EV sales, according to BNEF.

“The government understands that the kind of financial outlay needed for private vehicles is substantial and they don’t want to make that kind of outlay,” BNEF analyst Allen Tom Abraham said in an interview. “You convert more miles to electric once you support fleets and public vehicles.”

Tender Scrapped

In July, India’s state-owned Energy Efficiency Services Ltd., which is responsible for procuring EVs to replace the petrol and diesel vehicles used by government officials, scrapped a second tender it had announced to buy 10,000 EVs amid concerns that low-cost EVs were unable to match the performance of internal combustion engine vehicles. The tender’s scrapping also came as the industry awaited clarification on specifications for fast-charging standards.

At the same time, several state governments are planning to buy e-buses. Many cities have also begun trialing the operation of e-buses on selected routes.

Underlining the burgeoning interest in electrified transport and mobility in the world’s second-most populous nation, various ministry and industry partners in India next month will host a two-day conference in New Delhi called ‘MOVE: Global Mobility Summit.’

Prime Minister Modi is scheduled to deliver the keynote address at the conference, which is also expected to feature the participation of Takeshi Uchiyamada, chairman of Toyota Motor Corp., Volkmar Denner, chairman of Robert Bosch GmbH, Anand Mahindra, chairman of the Mahindra Group, Masayoshi Son, chairman of Softbank Group and others.

Modi’s administration is aiming to have more than 30 percent of vehicles run on electricity by 2030 in a bid to lower air pollution and curb reliance on fossil fuels. But EVs face challenges from sources other than internal combustion engine models.

According to a recent report from BNEF, India has the third-largest natural gas vehicle fleet in the world. Moreover, natural gas vehicles will only start to feel competition from EVs from the mid-2020s, with the total cost of ownership of EVs reaching parity with natural gas vehicles around 2025 to 2027.

“It’s going to be a different journey compared with China,” BNEF’s Abraham said.

BNEF clients can see the full report “Global Electrified Transport Market Outlook” on the Terminal or on web

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
 
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us