Last year, the penetration rate of electric vehicles (EVs) in the Indian market was only 1.1 per cent, as compared to the Asian average of 17.3 per cent, as per S&P Global Ratings data. Furthermore, another noted rating agency, Moody's, reported that even though India has the third-largest car market in the world, EV penetration has hovered around 1 per cent only. Surely, the figure looks dismal. But there are ample reasons why India is lagging behind in EV adoption.


What's Plaguing India's EV Adoption?


Experts from the EV industry have talked about the biggest issues regarding India’s EV adoption and showed paths to make the journey smooth for EVs. Despite making significant strides, there are still ample challenges that need to be addressed that include high initial cost of the EVs, limited charging infrastructure, especially in remote areas, and the need for robust policies to support the recycling and disposal of batteries.


Recognising the country’s current EV penetration rate of 1.1 per cent, which is below the desired expectations of the industry, Nehal Gupta, director, AMU Leasing, told ABP Live that there are several factors contributing to the challenges in expediting EV adoption. "The limited availability of charging infrastructure and concerns regarding range anxiety present obstacles for potential buyers. The high initial costs and the scarcity of affordable EV models discourage many consumers. Furthermore, apprehensions about battery performance, maintenance, and resale value add to the prevailing hesitation."


In its pursuit of a greener and sustainable transportation sector, the government has set ambitious targets for electric vehicle adoption, aiming for a significant increase in EV sales, and the establishment of a comprehensive charging infrastructure network. The government has been proactively working with the industry players to draft favourable policies to facilitate faster EV adoption.


Appreciating the government’s effort in implementing EVs in India, Sushant Kumar, founder and managing director, AMO Mobility, pointed out some macro- and micro-level challenges. 


"In the four-wheeler and commercial vehicle segment, the biggest challenge is inadequacies of charging infrastructure whereas in the two-wheeler segment demand generation is the hurdle even though the much adapted segment is two-wheeler EVs only.”


Beyond these challenges, Kumar npted a few obstacles such as limited number of quality suppliers, cost effectiveness in the components, and the need to establish a comprehensive ecosystem. He stressed that  EVs are the future of transportation and the government is taking all the necessary steps to ensure better penetration in the market.


He said it requires a skilled and knowledgeable workforce to overcome these obstacles. "Despite existing demand, a considerable segment of the population still prefers  Internal Combustion Engine (ICE) vehicles as superior. However, opportunities for improvement abound in areas such as last-mile delivery, bike rentals, and daily commutes, as EVs provide a cost-effective option. "Addressing problems related to battery availability and supplies will be pivotal in accelerating EV adoption. Comparing strategies and learning from other countries can also contribute to the growth of EVs in India," Kumar suggested.


Ashish Deswal, founder of EarthtronEV, also voiced the same concern. He mainly pointed out the lack of sufficient charging stations across the country. "Insufficient charging infrastructure is a major impediment for EV adoption in India. Charging stations are still relatively scarce, particularly in rural areas, which limits the convenience and practicality of EV owners," said Deswal.


Apart from charging infrastructures, the cost of buying an electric car is high compared to conventional vehicles. "EVs generally have a higher upfront cost compared to ICE vehicles as the price of batteries and other electric components are high. This price differential makes EVs less affordable for many consumers in India where price sensitivity plays a crucial factor in purchasing decisions," Deswal opined.


There's a lack of awareness and knowledge about electric vehicles among the general public. "Many people are unfamiliar with the benefits of EVs, such as reduced carbon emissions and lower operating costs. Awareness through education and targeted campaigns could help increase adoption," Deswal added.


Continued efforts in infrastructure development, policy support, and consumer awareness are key to accelerating the penetration of EVs in India.


Ankit Mittal, CEO of Sheru, said, "While EV penetration in India seems less in percentage terms, sales of EVs in some categories have seen a large increase in recent years. 2022 was the first year in which sales of EVs crossed the 10-lakh mark in a single year. For three-wheelers, over 50 per cent of all vehicles sold in 2022 were electric, making it the preferred fuel type. Though sales of electric variants have seen impressive highs, they are still in the single digits in their respective categories."


The main barriers to increase adoption are high upfront costs, lesser financing options as compared to those for petrol or diesel vehicles, and lack of widespread charging infrastructure. However, work is underway in solving these problems, Mittal said.


"Subsidies to reduce the upfront cost of the vehicle, an increasing number of financial institutions providing loans, and both industry and state efforts to widen charging infrastructure will help solve these issues and increase EV sales," he added.


Slowly Gaining Traction


The looming problems, however, could not deter the development of EV implementation. It has gained momentum in recent years, though slowly. With government aid, some progress has been achieved.


The Centre launched the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme in 2015 which provides financial incentives for the purchase of EVs and establishing charging infrastructure. FAME-II, launched in 2019, focuses on promoting the manufacturing of EV components and setting up charging infrastructure across the country.


On top of that, to encourage EV adoption, the government also provides various incentives and subsidies. These include reduced GST rates on EVs, income tax benefits on loans taken for EV purchase, and financial support for setting up EV charging stations.