Research Report of EV Industry in India

Present State of EV Industry in India 5
EV Components 16
Total Cost of Ownership 19
Outlook 22
Executive Summary 2
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TABLE OF CONTENT

EXECUTIVE SUMMARY (1/2)
• The Indian automotive industry is the fifth largest in the
world and is slated to be the third largest by 2030.
• The Indian automotive industry is growing at a fast pace
however, support from energy sector is required for
successful achievement of growth. Considering the scarce
nature of petroleum resources, Government of India is
focusing towards clean energy sources, hence the initiation
of electric vehicle (“EV”) industry.
• To encourage the EV industry National Electric Mobility Mission Plan (“NEMMP”) was launched in 2013 by
Department of Heavy Industry (“DHI”) as a roadmap for the faster manufacture and adoption of EVs in India.
• Various incentives are being provided by central and state government under different schemes. Faster Adoption
and Manufacturing of Hybrid and Electric Vehicles in India (“FAME India”) Scheme was notified in April 2015
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• According to an independent study by CEEW Centre for Energy Finance (CEEW-CEF), the EV market in India will
be a US$206 billion opportunity by 2030.
-
25,393 24,839
40,837
1,36,468
-
20,000
40,000
60,000
80,000
1,00,000
1,20,000
1,40,000
1,60,000
FY18 FY19 FY20 FY21 FY22
2- Wheelers
92,395
1,18,944
1,40,683
88,378
1,26,716
-
20,000
40,000
60,000
80,000
1,00,000
1,20,000
1,40,000
1,60,000
3- Wheelers
1,362 1,632
2,727
4,588
10,469
-
2,000
4,000
6,000
8,000
10,000
12,000
4- Wheelers
933
517
50 28
971
-
200
400
600
800
1,000
1,200
Goods Vehicles
Category-wise EV Sales
Source: Centre for Energy Finance
EXECUTIVE SUMMARY (2/2)
• Regardless of the country’s ambitious targets, India’s
EV space is at a nascent stage. However, looking at it
differently – India offers the world’s largest untapped
market, especially in the two-wheeler segment.
• 100 percent foreign direct investment is allowed in this
sector under the automatic route.
• In Union Budget 2022-2023 it was announced that
battery swapping policy will be brought out and inter-
operability standards will be formulated.
• Prices of nickel have soared over 100% in the last few
days as the Russia-Ukraine war has triggered a
shortage of the metal, threatening to disrupt production
of batteries for electric vehicles. The increased prices
may also drag the margins of the EV industry.

PRESENT STATE OF EV
INDUSTRY IN INDIA

• In May 2021, the government rolled out a Production-Linked Incentive Scheme (PLI) for ACC Battery Storage
Manufacturing, manufacturers will be selected through a competitive and transparent bidding process, and
selected beneficiaries will have to set up a manufacturing facility within two years. The incentives under the PLI
scheme will be disbursed over a fixed period of five years, from the time of commissioning of the manufacturing
facility.
• The Indian government is planning to localise the production of semiconductor chips to address the chip shortage
issue in the passenger vehicle segment and save money on foreign exchange.
• Government to offer up to 50% of project cost to companies setting chip plant: Applicants have to make a
minimal capital investment of Rs 20,000 crore and the Company must have minimum revenue of Rs 7,500 crore
(including group companies) in electronics system design and manufacturing in any of the 3 financial years
preceding the year of submission.
EV Component Manufacturers
PRESENT OPPORTUNITIES

• FAME (Faster Adoption and Manufacturing of Electric and
Hybrid Vehicles in India) is a part of the National Electric
Mobility Mission Plan. Main thrust of FAME is to encourage
electric vehicles by providing subsidies, it is aimed at
incentivizing all vehicle segments. There are two phases of
Scheme:
 Phase I: It was introduced in 2015 and was functional till
31st March 2019
 Phase II : It started in April 2019 and will continue till 31st
March 2024
EV Manufacturers

• Amendments to Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME) Phase II:
The eligibility criteria for these electric two-wheelers to qualify for subsidy under the FAME II scheme include a
minimum range of 80 km on single charge and a minimum top speed of 40 km per hour.
• As of January 2022, 160 models of electrical vehicles by various manufacturers have been approved under the
FAME II categorized into;
 2-Wheelers – 49 models
Old Policy New Policy
INR 10,000 (US$ 136.40) per
KWh upto 20% of vehicle cost
INR 15,000 (US$ 204.60) per
KWh upto 40% of vehicle cost
EV Manufacturers

KEY PLAYERS
2- Wheelers
As of January 2022, 49 models of electrical 2-Wheeler vehicles by various manufacturers have been approved under
the FAME II Scheme

KEY PLAYERS
3- Wheelers
the FAME II Scheme

KEY PLAYERS
4- Wheelers
15
the FAME II Scheme

PRESENT CHALLENGES
• Supply-chain Problems:
 EV battery manufacturing in India is still largely dependent on imports due to the lack of Lithium, and this poses
a major hurdle for companies willing to invest in India’s EV industry.
 Semiconductor Chip Shortage
 The chip shortage globally since H2 2020 has been driven by chip hoarding by Chinese Companies, poor
inventory planning by Original Equipment Manufacturers (OEMs), logjams at ports, major chip factories
being hit by natural disasters.
 Automakers are now cutting down on the usage of microchips in their vehicles to keep their production lines
running. Tata Motors, for instance, is giving only one remote key to the customers at the time of purchase and
offering the second one later. Similarly, infotainment systems with touchscreens are being replaced by simpler
audio players.
 The two-wheeler industry, on the other hand, is not affected much by the chip shortage as electronic items are
primarily used in their high-end models.

PRESENT CHALLENGES
• Lack of Charging Stations and Challenges from the Grid Side: India had established 927 charging stations
nationwide as of June 2020, however a lot of investment in charging infrastructure is still required.
According to an industry analysis, increased use of EVs by 2030 will shoot up the electricity demand by 100 TWh
or about 5% of total electricity which is yet to be streamlined.
This lack of adequate charging infrastructure poses a severe impact to garner substantial demands for electric
vehicles in India and clouds the profit-making strategies.
• Lack of Trained Personnel: The Senior Executive Director (Engineering) at Maruti Suzuki also said that the EV
industry in India is still at its nascent stage, and almost every automobile organization will face a challenge in areas
of EV talent acquisition and development.
• Impact of FAME II Policy: In the year 2019, the Indian government approved the FAME II scheme, by which the
government has proposed to invest about USD 1.4 billion to incentivize the production of electric vehicles in the
country.
 FAME II requires 50% localization in vehicle production is required to avail of the incentive. This is a
significant India market entry strategy barrier for most organizations.

Delhi Karnataka Maharashtra Gujrat Haryana Punjab Tamil Nadu Uttar Pradesh Uttrakhand Andhra Pradesh West Bengal
Manufacturing
Capital Subsidy r a r r a r a r r a r
SGST Reimbursement r a r r a a a a a a r
Stamp Duty Reimbursement r a r r a r a a r a r
Electrcity Duty Reimbursement r a r r a a a a a a r
Land Conversion fee/Subsidy r a r r a a a a r a r
Charging Infra
Capital Subsidy r a a r a a r a r a r
Consumer
Capital Subsidy a r a r a r r r r r r
SGST Reimbursement r r r r r r r r r a r
Road Tax Exemption a r a r a r a a r a r
Motor Vehicle Tax Exemption r r r r r a r r a r r
Registration fee Exemption a r a r r a a a r a r
EV POLICY COMPARISON BY STATE
Along with Central government, State governments have introduced its different set of policies to incentivize the
sale of Electric Vehicles.

CURRENT PLAYERS IN EV INDUSTRY
Infrastructure as a Service
Mobility as a Service Energy as a Service
Source: E-amrit

COMPONENTS OF ELECTRICAL VEHICLE
The power train of an electric vehicle is a simpler system ,
comprising of far fewer components than of internal combust
engine (ICE) vehicle. An EV has 60% fewer components than
an ICE Vehicle. Components of EV are listed below;
• Traction Battery Pack
• Power Inverter
• Controller
• Electric Traction Motor
• Other Electric Car Components
 Charger
 Transmission
 DC/DC Converter
 Battery
 Thermal System – Cooling
 Charge Port
EV powertrain has 60% fewer components than
the powertrain of an ICE leading to lower
maintenance costs

TYPES OF BATTERIES
Sodium-Ion Batteries: In terms of cost, sodium-ion cells will be slightly more expensive than lead-acid, but cheaper than
lithium-ion cells by about 30-40%. Some manufacturers have spoken of how Li-ion batteries make up for the most
expensive component of an EV, accounting for 40-50% of its cost. Conglomerates like Reliance Industries and startups like
the Pune-based Sentient Labs, Roorkee-based Indi Energy and Sodion Energy in Coimbatore are making real strides in this
direction.
Lithium-ion Battery Market
Source: Maximize market research
Lithium-Ion
Nickel- Metal
Hybrid
Sodium- Ion Ultracapacitors Lead Acid

0
5
10
15
20
25
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
INR
in
Lakhs
Total Cost of Ownership
Diesel EV
INDICATIVE COST OF OWNERSHIP
• The most accurate assessment of the economic efficiency of
EVs is the ‘total cost of ownership (TCO) that is the sum of
all costs involved in the purchase, operation, and
maintenance of a given asset during its lifetime. A TCO
comparison of electric vehicles and ICE vehicles provides
valuable insights.
• The higher upfront purchase cost of high-performance
electric vehicles has been one of the major barriers to EV
adoption in India.
• Compared to ICE vehicles, EVs require less maintenance,
therefore the service and maintenance costs are also very
low. The battery, motor, and associated electronics require
little to no regular maintenance.
• Thus, as shown in corresponding table, despite the high
upfront cost an electric vehicle it shall be more cost effective
in the long run.
• Further, the constant year on year reduction in battery price
will led to early achievement of cost pay parity.
Tata Nexon
Diesel EV
Initial Cost 8,30,000 13,99,000
No. of Km/Year 20,000 20,000
Cost/Km 7.27 0.84
Running Cost 1,45,455 16,800
Maintenance 20,000 5,000
Excess Upfront Cost
Annual Savings
Cost Pay Parity
Particulars
1,43,655
5,69,000
3.96
Note:
Diesel cost has been assumed as INR 80 per litre
Cost of electricity is assumed to be INR 7 per unit
Mileage of diesel model is assumed 11km/hr and that of EV 250km
on 30 units of charging
Example of 4-wheeler vehicle

OUTLOOK
• Indian EV market has a huge growth potential as it is still at a nascent stage.
• Various policies and guidelines for regulating and incentivize EV Industry
have been formulated both at Center and State level, however considering the
early stage of industry various policies still need to be formulated as it is as
evolving industry.
• The government has taken positive steps toward finding a solution to
challenges faced by EV Industry, such as incentives for setting up chip
manufacturing unit.
• More efforts/incentives are expected from both Central and state Govts to push EV adoption.
• In budget FY 2022-23 it was resolved to formulate battery swapping policy for EV by Central Government.
• The constant reduction in battery price will led to early achievement of cost pay parity.
• Thus, in future we can see a more dynamic shift towards EV Vehicles is expected and more players are also
expected to join in and solve the problems of EV Industry in India.

DISCLAIMER: The analysis made in this note has been made based on the limited
information available and our understanding and interpretation of applicable laws as
on date. This material is prepared for general information purposes only and is not
intended for solicitation, nor entail any advice. We expressly disclaim any financial or
other responsibility arising due to any action taken by any person on the basis of this
note. All Rights Reserved @Transique.
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