Bridging the gap in India’s EV growth • EVreporter

The EV four-wheeler business is growing rapidly, with this growth evident in the numbers. EV sales in India reached 1.67 million units in FY2024, representing a 42% increase year-on-year. Within this, the e-car segment registered the maximum year-on-year growth of 90% despite the limited availability of models in this segment (Source: PV Magazine India). In the future, EV sales in India are expected to grow at a compound annual growth rate (CAGR) of 35%, with annual volumes likely to reach 27.2 million units by 2032 (refer: Business Standard). Nearly 91,000 electric cars were sold in India during the Financial Year 2023-24. According to data released by the Federation of Automobile Dealers Associations (FADA) of India, this compares to 47,551 electric cars sold during the same period in FY2023, marking a remarkable 91.37% year on-year growth (Source: Car and Bike).

The growth in the electric vehicle (EV) market has not been uniform across all segments. Specifically, while the adoption of EV two-wheelers has surged in urban areas and is rapidly catching up in rural regions, the same cannot be said for EV four-wheelers. Rural consumers, recognizing the benefits of EV technology, are increasingly drawn to two-wheelers, particularly due to the scarcity of petrol and diesel stations outside highways and the prevalence of individual houses which facilitate in-home charging. This trend is accelerating growth in the two-wheeler segment. In contrast, the EV four-wheeler market remains predominantly urban, with significant sales concentrated in Class A and B cities and, to some extent, Class C cities. Rural adoption of EV four-wheelers lags, as consumers in these areas continue to prefer traditional petrol and diesel vehicles.

Considering the population ratio, a substantial portion of the population resides in rural areas, making the rural market vast and potentially lucrative. However, companies have struggled to penetrate this market effectively. With the growing Agri economy, the overall living standard in villages is improving. However, e-cars have not yet penetrated rural areas, so overall market growth is minuscule.

Through conversations and analysis, several reasons for this difficulty have emerged.

1. Road Infrastructure: Urban areas and major highways benefit from superior road infrastructure, with government initiatives focusing on enhancing intercity connectivity. This facilitates the effective utilization of EV four-wheelers, enabling users to reap financial benefits. However, the roads linking talukas and villages, as well as internal infrastructure, remain subpar. Potholes and poorly maintained patches deter customers from embracing EV four-wheelers, which are perceived as delicate due to their advanced technology.

2. Driving Range: Due to their limited driving range, EVs are not perceived as viable commuting options in rural areas. Residents often travel to cities or district centers for work, sometimes with little notice. Consequently, there is apprehension that EVs may not offer uninterrupted journeys due to their lower ranges. In comparison, petrol or diesel vehicles are deemed more dependable, benefitting from readily available fuel sources.

3. Overloading: In India, cars serve as versatile multi-utility vehicles, transporting everything from farm materials to heavy household items and often accommodating more passengers than their designated capacity. They are essential for family transportation and are frequently overloaded for various purposes, such as wedding processions and festivals. However, with EVs, overloading significantly impacts the vehicle’s range. This dilemma leaves users questioning whether to prioritize load capacity or preserve range. This unresolved issue poses a significant challenge in the adoption of EVs.

4. Charging Infrastructure: The growth of on-road charging infrastructure is impressive, yet it currently favours urban connectivity. Charging parks and stations are emerging in urban areas, often situated in restaurant parking lots or fuel stations along major routes. However, the rural market remains overlooked. Once drivers venture off the highway, the scarcity of charging points becomes glaringly apparent, leaving them uneasy until they reach their destination. This lack of charging facilities along rural routes heightens concerns about range and accessibility for EV users.

5. Power Outage Challenges: India’s rapid growth parallels an increasing demand for power, yet the existing power generation infrastructure struggles to keep up. Shortages persist, necessitating location-specific power outages as a management measure. Rural areas have long endured the brunt of these outages, with little improvement over time. This persistent issue could dissuade customers from embracing EV adoption as uncertainties surrounding reliable access to electricity persist.

6. Post-Warranty Service or Repairs: This issue looms large as a perceived challenge. In cities, seasoned roadside mechanics are swiftly acquainting themselves with advancing automotive technologies, albeit grappling with the added complexity introduced by new emissions standards. Despite these challenges, urban mechanics are diligently learning and adapting to repair modern vehicles, including those laden with electronics. Similar progress is anticipated for electric vehicle (EV) technology, with mechanics poised to master servicing and repairs at an accelerated pace. However, rural areas present a contrasting scenario, where mechanics often adhere to traditional methods and show less flexibility. Consequently, owners of modern vehicles, including EVs, frequently find themselves compelled to transport their vehicles to urban centres for both within and post-warranty repairs. The reluctance to invest in repairing infrastructure for cutting-edge technology exacerbates this situation. The perceived complexity of EV technology gives potential customers pause for thought before making a purchase decision.

7. Impact of Accidents on EVs: Customers worldwide remain apprehensive about the aftermath of accidents involving electric vehicles (EVs). Concerns arise regarding the EV’s response to such situations: Will there be a risk of explosion? Is the construction of EV four-wheelers sufficient to absorb impact effectively? These questions persist without regulation or comprehensive data available to provide reassurance—even urban residents, who are increasingly adopting EVs as secondary vehicles, exhibit reservations. Rural communities facing infrastructure challenges harbour even greater scepticism. Unfortunately, definitive answers to these questions remain elusive at present.

To summarize, despite the swift rise of electric vehicles (EVs), numerous hurdles persist, hampering widespread acceptance. Disparities in road infrastructure and charging accessibility between urban and rural areas, along with concerns over post-warranty service and accident safety, pose significant challenges. Consumer scepticism regarding the practicality and reliability of EVs remains prevalent, especially in rural communities constrained by infrastructure limitations. While urban dwellers increasingly adopt EVs as secondary vehicles, addressing these obstacles necessitates concerted efforts in infrastructure development, regulatory frameworks, and public awareness campaigns to foster trust and facilitate the mainstream adoption of EVs.

About the Author:

Abhijit Kulkarni

Founder – Exponent Business Solutions, Pune

abhi.kulkarni@exponentsolutions.in

+91-9028198141

Also read: How the electric scooter market is different the ICE scooter market