Most people associate electric vehicles with automobiles. Global sales of electric vehicles have increased dramatically, with brands ranging from Tesla and Rivian in the United States to Nio and XPeng in China. The International Energy Agency reported that two million EVs were sold in the first quarter of 2022, a significant increase from a decade ago when sales totaled only 120,000 cars worldwide.

India is unique. The United States and China have prioritized the adoption of electric vehicles. However, scooters, mopeds, and motorbikes dominate the market in India, the world’s fifth-largest economy.

Two-wheel vehicles are in higher demand than cars in India, according to James Hong, head of mobility research at Macquarie Group.

Underdeveloped road infrastructure and lower personal incomes make owning scooters, motorbikes, or mopeds more convenient and affordable, according to Hong.

Nonetheless, adoption remains low.

EVs account for only about 2% of total automobile sales, but the Indian government has set ambitious targets to increase EV adoption over the next decade, with a focus on increasing two-wheel vehicle purchases.

According to Bain & Company projections published in December, sales in India are expected to rise by 40% to 45% by 2030, when 13 million new vehicles will be sold annually.

According to the consulting firm, India’s four-wheel vehicle sector will grow by only 15% to 20% by 2030, with 1 million new vehicles sold each year.

According to Arun Agarwal, deputy vice president of equity research at Kotak Securities, growth in India’s four-wheel EV segment is expected to be slower because the cars are mostly owned by drivers who travel outside of the city on longer routes.

According to Bain & Co., total revenue generated by India’s EV industry’s entire supply chain will range from $76 billion to $100 billion by 2030.

People in India have long preferred two wheels to four, according to Agarwal, and the country is home to more than ten startups serving the market.

Jinesh Gandhi, equity research analyst at Motilal Oswal Securities, told CNBC that for India to increase its purchase of two-wheel vehicles, they must be cheaper and have more charging infrastructure.

According to Gandhi, 90% of two-wheel vehicles with internal combustion engines cost between 70,000 and 140,000 rupees ($845). The price of an electric two-wheel vehicle can start at 160,000 rupees.

EV prices will fall if battery prices fall, according to Kotak’s Agarwal.

According to Bain & Co., high inflation and disrupted supply chains will drive batter prices higher in 2022. To compete with internal combustion engine vehicles, the cost of EVs would need to drop by another 20% to 30%.

The “lifecycle cost of ownership of an EV is lower” than a two- or four-wheel vehicle that runs on fuel, according to Arun Kumar, chief financial officer of two-wheel EV manufacturer Ola Electric.

According to him, the amount of money EV owners can save on fuel and maintenance costs can offset the higher initial purchase price.

Ola’s two-wheel scooters, upcoming motorcycle, and four-wheel passenger car are priced between $1,000 and $50,000, he claims.

“There’s no coming back to [internal combustion engine] vehicles. It’s a single direction,” Kumar added.

According to Kotak’s Agarwal, the central and state governments in India have been providing incentives to encourage consumers to switch to EVs.

Government programs, according to the International Energy Agency, have provided funding to ramp up production of EV public buses and taxis, as well as increase charging stations throughout India.

EV owners will also receive a road tax exemption at the time of purchase, as well as a deduction on their income tax, according to the Accelerated e-Mobility Revolution for India’s Transportation.

Owners of two-wheel internal combustion engine vehicles in India typically pay 3,000 rupees per month for their vehicle, including taxes, according to Kumar.

Government initiatives, combined with savings on gasoline, would result in a customer’s monthly installment becoming largely free, he said.

As the use of electric vehicles grows, so will charging infrastructure across the country. According to Kotak’s Agarwal, this is still a factor discouraging people from switching away from carbon-intensive vehicles.

“If you are stranded on the road, you don’t have any option but to get the vehicle towed to the nearest charging station, which is time- as well as a cost-consuming,” Gandhi said.

According to the Bain & Co. report, India’s charging infrastructure will need to significantly expand to support the number of EV companies that are set to hit the roads, noting that several companies have made early investments and are committed to increasing charger availability.

Tata Power, India’s largest privately held power generation company, is one of them.

Tata Power claimed to have built approximately 2,500 charging stations in 300 Indian cities and towns. According to Virendra Goyal, the firm’s head of business development, they can be found on 350 of the country’s 600 highways.

Many EV owners experience “range anxiety” when charging stations are too far apart, and bridging the gap would encourage more drivers to switch to e-mobility, he said. According to Goyal, the company’s goal is to have 25,000 chargers across India by 2028.

(Adapted from CNBC.com)

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