Pandemic to Delay EV Penetration in India; 2Ws in the Clear: Ind-Ra

Ind-Ra has detailed in its latest analysis that it expects the COVID-19 pandemic to delay the electric vehicle (EV) penetration in India.

India Ratings and Research (Ind-Ra) has detailed in its latest analysis that it expects the COVID-19 pandemic to delay the electric vehicle (EV) penetration in India. The analysis cites low affordability and the government’s priorities on reviving the otherwise suffering auto industry as reasons for the probable shift in focus away from EVs in the interim.

Passenger vehicles (PVs) would face a double whammy as consumers would be wary to buy a costlier EV than an internal combustion engine (ICE) vehicle while original equipment manufacturers (OEMs) would refrain from incurring high capex. Further, growth in buses may take a back seat as orders for city buses are largely from state transport undertakings, and state governments are already grappling with a falling GDP.

Two-wheelers (2W), especially scooters, could see an upside due to the lower pricing delta between an EV and ICE and several models available to consumers. Though the EV penetration is likely to be faster in scooters, buses and three-wheelers (3W) in the medium term (defined as three to five years), PVs may take longer.

Ind-Ra also believes that underlying challenges in the adoption of EVs such as higher battery cost and reliance on imports would prevail in the medium term, and robust government policies would remain key for the development of EVs in the country.

The analysis goes on to add that the reduced affordability and lower economic activities due to the pandemic could result in the automobile industry recording a decline in sales of over 20 percent yoy for the second consecutive year in FY21. This is likely to impact the sales of EVs which are costlier than an ICE vehicle. 2Ws have benefitted from rural demand and shift to personal mobility, and the segment could be the least impacted with regard to electrification due to better pricing and model choices. However, 3W and buses, which have seen higher electrification in 2019, are among the most affected segments in FY21 and hence could see a delay in electrification.

EV Penetration in India

Ind-Ra believes electrification to be faster in scooters and 3W as the economic viability of an EV is comparable to an ICE vehicle as well as easier home charging options. Scooters are also used as dual vehicles in many households, increasing the inclination for an EV. However, electrification is likely to remain low in PVs in the medium term due to the higher cost of an EV model than an ICE model. While the on-road price of an Ather 450 is around 33% higher than Honda Activa’s, the running cost per kilometre of an EV is fairly lower at 20 percent-25 percent than that of an ICE, thus making economic sense for a consumer. The on-road price of a Hyundai Kona Electric is more than double the cost of a Hyundai Creta, making it fairly expensive for the consumer. Also, the inter-city usage of a PV necessitates a sound charging infrastructure across cities.

Electrification is likely to be highest in buses, due to the highest incentives (41 percent) being allocated under the Faster Adoption & Manufacturing of Electric Vehicles (FAME) -II scheme as well as the initiatives taken by state governments to electrify bus fleet amid increasing pollution. Moreover, as scooters, 3W and buses are used for intra-city transportation, where the distance covered is shorter, makes charging infrastructure easier to develop and thus makes it more viable for daily usage.

Ind-Ra also expects earlier electrification of commercial fleets of home-based delivery apps (such as Swiggy / Zomato) in 2W and Ola / Uber for PVs, than vehicles for personal use, due to the longer distance travelled on a daily basis making it economically feasible. However, as consumers are shifting away from shared mobility, EV penetration in PVs could face a set-back. Increased e-commerce should also help electrification in 3W goods carriers and light commercial vehicles (CVs).

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Ayush Verma

Ayush is a staff writer at and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for