Electric vehicles are on the rise in India. A new report suggests that the new industry presents an opportunity of about Rs 3 lakh crore in India over the five years through fiscal year 2026.
A study by CRISIL showed potential revenues of around Rs 1.5 lakh crore across vehicle segments for original equipment manufacturers (OEMs) as well as component manufacturers and with shared mobility and insurance accounting for ~Rs 90,000 crore in the form of disbursements for vehicle financiers. Indicates potential revenue. for balance.
The CRISIL report suggests that EV adoption continues to increase as more people move away from internal combustion engine (ICE) vehicles. The report also cited vehicle portal data. The data shows that the share of electric three-wheelers (3W) increased from less than 1% in FY2018 to around 5% of registered 3W in FY22. For electric two-wheelers (2W) and buses, the percentage increased to around 2. % and 4% respectively.
The CRISIL report claims that even smaller cities are adopting the EV route. The government’s fiscal and non-fiscal measures have pushed buyers towards an electric option. According to VAHAN data, the contribution of the top 10 districts to the sales of electric cars and 3W across the country declined from 55-60% in FY21 to 25-30% in FY22. For 2W, the percentage dropped from 40-45% to 15-20%.
An increase in conventional fuel costs is also contributing to this change in consumer behaviour. There is a huge impact on the long-term affordability of ICE vehicles as daily costs continue to rise.
Central schemes like Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-India), Phased Manufacturing Plan and Production Linked Incentive have started the EV journey of the country.
An analysis of CRISIL’s total cost of ownership shows that electric 2W and 3W achieved parity with ICE vehicles in the last fiscal, even though running 6,000 km and 20,000 km respectively annually. By 2026, the analysis indicates, the adoption of 2W and 3W will increase even without subsidies, due to the similarity of ownership costs with ICE vehicles.
Hemal Thakkar, Director, Crisil Ltd. says, “Given the increasing cost parity and the government’s focus on electrification of vehicles, we should not be surprised if the EV penetration is 15% in 2W, 25-30% in 3W and 5% in cars. and buses by FY 2026 in terms of vehicle sales.”
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