Virendra Pandit
New Delhi: Although some battery-run vehicles are now visible on Indian roads, the South Asian country is still far behind other Asian nations in terms of electric vehicle (EVs) penetration into the automobile market.
Globally, the EV penetration is estimated at 13.3 percent.
According to a 2021 report, The Netherlands topped with an EV adoption rate of 37%, followed by Germany (16%), Canada(13), the UK (10), China (4), the USA, (4), India (2) and Japan (1%).
The S&P Global Ratings, in its latest report, found that the EV penetration rate—that is, their sales percentage out of total light vehicle sales in 2022—was only 1.1 percent, as compared to the Asian average of 17.3 percent.
In other words, if customers in other Asian countries bought 17 EVs out of every 100 motor vehicles, their Indian counterparts bought only one EV out of every 100.
Clearly, India, the fastest-growing economy worldwide, will have to take a call to update its policies and speedily create the right infrastructure to push EV sales to become a significant player in the Asian EV and supply chain sweepstakes, the media reported on Thursday.
Besides India, the S&P’s study on the sales of EVs in Asia also covered China, Japan, South Korea, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, the greater China region, and Pakistan.
While China is at the top, with an EV penetration of 27.1 percent, South Korea, which started slow, has seen EV sales zoom to 10.3 percent. The average range of EV penetration in Indonesia, Vietnam, Malaysia, the Philippines, and Thailand ranges from 0. 1 percent to 2.5 percent. Among these, Thailand has the fastest rate of transition to EVs.
The EV penetration in Japan is about 2.2 percent. Besides, unlike New Delhi, Tokyo also supports other clean technologies like hybrids, plug-in hybrids, and fuel cell vehicles, besides lithium-ion battery-powered EVs.
India has projected that EV penetration would be 30 percent by 2030. But currently, 90 percent of EVs in the country are two and three-wheelers. Even if they are added (with the exception of e-rickshaws, which do not use lithium-ion batteries) the penetration would be around 4.5 percent.
Asian countries dominate the supply chain, accounting for 98 percent of the battery cell supplies. According to the S&P projection, it will continue to control 90 percent of this market even in 2025. But India is still far behind other Asian nations in battery cell production.
The big players in the battery cell market include the Chinese CATL and the South Korean giant, LG EnSol, which, together, control nearly half the global supply. The other player in this space is Japan’s Panasonic which supplies US major EV maker Tesla.
Although India still imports its entire requirement of cells, the production-linked incentive (PLI) scheme could change the game. Under the scheme, 50 gigawatts (GW) of battery capacity with advanced cells is planned within two years.
India’s recent finds of crucial raw materials like lithium, the key to making batteries, may also change the scenario soon. These discoveries included 5.9 million tons (MTs) of lithium deposits in the Union Territory of Jammu and Kashmir (which will be auctioned this year). Recently, similar deposits were reported in Rajasthan also.
Meanwhile, Indonesia, the largest producer of nickel in the world, is emerging as a key player in battery-grade nickel in Asia and has attracted investments of USD 30 billion in the mining and refining this metal.
India’s Tata Motors now sell some 6 percent of their total sales in the EV space and plans to increase it to 20 percent of the total by 2026.
In contrast, Japanese carmakers like Nissan, Honda, and Toyota, sold 1 to 3 percent of EVs out of total sales of cars in 2022. South Korea’s Hyundai and its group company Kia have achieved an EV penetration of 10 percent, while Chinese automakers Zhejiang Geely, Geely Auto, and Dongfeng have an EV penetration between 14 and 26 percent.