Electric vehicle adoption: Two-wheelers, three-wheelers to lead the pack

CHENNAI: Two-wheeler and three-wheeler fleet will be the first to witness electric vehicle adoption in India followed by intra city buses, corporate cabs and government fleet, says a new report by EY titled ‘Standing up India’s EVecosystem – who will drive the charge?’

The primary reason for fleets being early adopters are the economics that EVs offer over combustion engine vehicles and that the fleet owners base their purchase criterion on the total cost of ownership (TCO) and not just the acquisition cost of the vehicle.

Rakesh Batra, Partner and India automotive sector leader, EY said, “The growth of EVs in India will witness differential growth patterns across cities, vehicle segments and vehicle applications. In terms of vehicle segment and applications, shared vehicles and fleets will offer a better value proposition for all stakeholders – manufacturers, as higher volumes can help them achieve scale as well as fleet operators because the TCO of EVs is lower than ICEVs.”

“The current cost dynamics of an EV used for commercial purposes are quite comparable with TCO of an EV merely 12% more than that of a comparable ICEV. This would further change in favour of EVs as post the implementation of BS 6 norms, the TCO of an electric car is expected to be 4% lower for a commercial user,” he added.

Two-wheeler and three-wheeler segments offer a huge opportunity for electrification in India given it is the world’s largest two-wheeler market as well as one of the biggest markets for three-wheelers.

These are widely used by masses for mobility and cargo transportation. While we are witnessing an increasing thrust by a number of startups and traditional OEMs, government’s role would also be critical to drive their mass adoption.

Intra-city buses is another segment which is amenable for electrification as the route predictability is very high, thus enabling the development of charging infrastructure on the route / bus depots.

However, high cost of e-buses due to heavier and pricier batteries remains a challenge. While the trucks segment makes more economic sense to electrify because of the fixed routes and larger distances covered, high battery capacity requirements and uncertainties around decline in residual value with decline in battery costs are impediments to their electrification, said the report.

This transformational shift has significant implications for the existing supply chain as well- manufacturing systems, charging infrastructure and ownership models, distribution and aftermarket.

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