CRISIL Says Electric Vehicles Present Rs 3 lakh crore Opportunity for India by 2026

Ratings and research company CRISIL has come out with an analysis that the electric vehicles (EVs) present an opportunity of about Rs 3 lakh crore for various stakeholders in India in the five years through fiscal 2026.

CRISIL says that the original equipment manufacturers (OEMs) and component manufacturers will have potential revenue of about Rs 1.5 lakh crore. About Rs 90,000 crore will be available in the form of disbursements for vehicle financiers.

The CRISIL analysis also finds faster adoption of electric vehicles in all segments in India and in cities, towns and districts. According to CRISIL, data on the Vahan portal reveals that the share of electric three-wheelers increased to almost 5% of 3Ws registered in fiscal 2022. It was less than 1% in fiscal 2018. For electric two-wheelers and electric-buses, the percentages rose to almost 2% and 4%, respectively.

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The Vahan portal data also discloses that the contribution of the top 10 districts in nationwide sales of electric cars and electric three-wheelers dropped from 55-60% in fiscal 2021 to 25-30% in fiscal 2022. The decline for electric two wheelers is even drastic: 40-45% to 15-20%. This means other districts are rising up in EV sales.

CRISIL analysis also delves into reasons for the positive trajectory of the EV sector but they are just too evident. CRISIL says that rising fuel prices, higher cost of ICE vehicles, shared mobility, battery swapping and government support for EVs play a crucial role in the sector’s success. Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-India), Phased Manufacturing Plan, and Production Linked Incentive by the Central Government find a special mention by CRISIL. It says that many state governments have also provided demand incentives, and capital assistance for setting up greenfield EV manufacturing plants.

Hemal Thakkar, Director, CRISIL Limited, informs, “Considering the improving cost parity and the government’s focus on electrification of vehicles, we should not be surprised if EV penetration reaches 15% in 2Ws, 25-30% in 3Ws, and 5% in cars and buses by fiscal 2026 in terms of vehicle sales.”

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CRISIL says that new businesses and trends will develop in future. Battery-as-a-service and public charging stations, Mobility-as-a-service and micro-mobility are expected to emerge as all that growth materializes.

Jagannarayan Padmanabhan, Director, CRISIL Limited, says, “In sum, the emergence of EVs is an opportunity for both existing and new industry participants to innovate and capitalize on the quickly evolving passenger and cargo mobility. To address ecosystem challenges of the EV industry, the government is considering rolling out a structured battery swapping policy. Such facilitations will go a long way in realising the EV potential. In addition, improvement in availability of finance will push EV adoption.”