Why are Electric Cars Not Popular in India?

While electric 2-wheelers & 3-wheelers are very popular and leading the EV wave in India, buyers are not that attracted to electric cars. One of the main reasons behind this is the high ownership cost. According to Kearney Consulting, for short distances (less than 40-45 km), the cost of ownership of electric cars is costlier than petrol cars. At distances beyond this, electric cars begin offering favourable cost propositions. Most people in Indian cities travel less than 40 km a day between their homes & workplaces, which limits the savings from the low running costs of electric cars.

India also has a highly penetrated alternative fuel in the form of CNG, which is a big competition for e-cars. COVID-19 led to a fall in crude oil prices, disruptions in supply chains and a significant drop in consumer demand across industries. This slowed the market penetration of electric vehicles, batteries and chargers. Further disruptions were caused by high import duties and a global shortage of semiconductor chips.

India’s car buyers are very selective and particular, aspirational but cautious when it comes to spending. That is why India’s biggest carmaker Maruti Suzuki has not thrown its hat in the electric car market. The reason: e-cars are costly. Foreign brands have struggled. Apart from high prices, the challenges range from too few charging stations to battery disposal to uncertain resale value. With Maruti Suzuki waiting for the right time, its competitors like Hyundai, Tata Motors and Mahindra are already in the market. If an automobile company can make EVs affordable, it can rule the market.

Customers are getting exposure to the developing EV ecosystem in India, but there remain many challenges that are creating hindrances to the growth of EVs (especially e-cars) in the country.

Main challenges for electric cars in India:

1. High Price: Electric cars are way more expensive than conventional cars. For eg., the Tata Nexon starts at Rs.7.19 lakh while the Tata Nexon EV starts at Rs.13.99 lakh. The majority of Indians possess limited disposable income, which has further fallen due to the pandemic. Owning a car remains a luxury. Almost 75% of the buyers go for cars which are less than Rs.10 lakh. Most electric cars are currently priced above Rs.10 lakh.

2. Charging Infrastructure: EV users in India are usually worried about the vehicles capability to reach from Point A to Point B before the battery runs out. This is due to the sparse EV charging infrastructure in India. While petrol pumps & CNG stations are deeply penetrated, electric charging stations are hard to find and are mostly concentrated in urban areas.

3. Perception: Choice of cars depends on cost, mileage, trust, technology, infrastructure availability, environmental concern, etc. These arguments hold true for both conventional & electric cars. EV manufacturers & governments have to invest more in acceptance of the vehicle by creating more infrastructural facilities, technology, subsidies to create trust & demand. Despite the fact that Indian consumers are becoming more open to adopting EVs, the negative perception still exists due to the lack of charging infrastructure, vehicle prices, resale value, etc.

4. Battery Technology: The lithium-ion battery is the most widely used energy source for EVs. Currently, Li-ion batteries are imported from China, resulting in high prices for these components and ultimately the EVs as well. India being a price-sensitive market, needs to focus on cost-effective battery technology. India also needs an infrastructure with respect to battery recycling.

5. Charging Time: Charging time is another drawback for e-cars. Indians are used to quick refuelling at petrol pumps and compared to that, even with fast charging DC tech, the time taken with EVs is more.

6. Breakdowns & Maintenance: Although an electric car has very few moving parts on board as compared to a conventional car, in case of a breakdown, one cannot just call a normal mechanic. You will have to call a company authorized service personnel which is a time-consuming process. The EV service network is yet to reach a substantial level.

7. Lack of options: There are many options if one wants to buy a conventional car but the same cannot be said for an e-car. Only a few options are there. Despite the cars being from known brands, people have doubts about their reliability.

8. Government Policy: The government’s stance towards foreign investment in the Indian EV market has been questioned recently. Tesla for years has shown its intent to begin sales in India and to build a local factory but wants cheaper tariffs so that it can test the market initially with imported vehicles. But the government gave a statement urging Tesla to avoid selling cars made in China to Indian consumers and focus on local production. 

9. Safety: Problems pertaining to the safety of e-cars in western countries may differ from those in Indian conditions. Irregular voltage supply, extreme temperatures, humidity, lack of trained personnel can cause serious problems. In India, it appears that some safety regulations still need to be framed. This is critical as the consequences can be highly catastrophic and life-threatening.

10. Environment friendly: People investing in costly green-tech need assurance whether the EVs they are investing in really serve the mission of being eco-friendly. No greenhouse gas emissions come directly from EVs. However, the indirect factor is there considering they run on electricity, which is largely produced from fossil fuels in India. To achieve maximum benefits, a country must transition to clean renewable energy sources and electrify transportation. As grids become greener, the impact of EVs will increase manifold. But it will take time in the country.

A clear policy supported by a coordinated approach of the government and the industry, including a supportive tax infrastructure and rising participation of market forces, can drive the EV ecosystem in India at a rapid pace. A committed, coordinated effort can successfully ensure a brighter future composed of a cleaner and greener environment, enhanced global competitiveness and an investment hub full of great possibilities.

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