Updated: Jul 27
India is on its path to achieving the target of achieving 30% electric vehicles (EVs) on roads by 2030. This might seem overly ambitious to many but might be achievable if the right steps are taken.
To achieve this target, one of the primary steps is for electric vehicles to be available at a price point that is at par with their internal combustion-engined counterparts.
For a price-sensitive market like India, EVs need to be more attractive to the end user in every aspect. Feature-loaded, safe, easy to operate, high on mileage, and most importantly easier on the pockets of the Indian consumers.
So, is that going to happen anytime soon? Are EVs going to achieve price parity with their fossil-fuel-based competitors? Let's find out.
Why are EV Prices in India So High?
Yes, the research and development in the EV sector is moving at a fast pace. However, it is yet to reach a stage where the cost of batteries and other technical comes down.
One of the major reasons for the EVs to be priced at a premium is the extensive technical component involved while making an electric vehicle.
The high demand for battery materials required while making an EV is another reason for the high costs of EVs.
How Can the EV Prices Come Down?
Considering all the factors in mind, there are some clear assumptions that we can make about the price trends of electric vehicles in India in 2023.
Decreased Battery Costs: More than 50% of an EV's components are made up of the battery, the powertrains and other tech that powers it. This, in contrast to a conventional combustion engine vehicle (20%) is a lot more. Since the introduction of the commercial viability of lithium-ion batteries, the prices for lithium-ion batteries have come down drastically. Along with this, the advancements and research going on in the battery development space are also going to bring down the overall costs of EV battery manifolds.
Increase in Demand: Demand for EVs is likely going to move up further. As the Indian consumer becomes more aware of the benefits that an EV has to offer, the idea of the 'perfect family car' that's practical, affordable (eventually), and has a great return on investment might change.
Better Charging Infrastructure: Range anxiety is one of the concerns that mars the customer sentiment around electric vehicles in India. There are plans in place by the Indian government to set up charging infrastructure across the country, which will further expedite the adoption of EVs, by addressing the issues around range anxiety.
Economies of Scale: As the sales volume of electric vehicles increases across the world, then the countries can be looking at achieving economies of scale. With the decrease in the per unit price of electric vehicles, all the stakeholders from the manufacturers to the suppliers, retailers and the final consumer will benefit from the reduction in the prices of raw materials.
Achieving Price Parity: Experts and key leaders in the automotive industry are on the same page when it comes to their opinions on traditional combustion-engined vehicles and electric vehicles achieving price parity in the near future. With a list of subsidies and government incentives in place, the projected date for achieving price parity will be even closer than currently assumed.
Broader Markets: As more car manufacturers place their bets on the EV markets, consumers will have better and wider sets of options to choose from. The Indian EV market is expected to grow by 66.52% by 2029. As major players enter the market, healthy price competition is only going to help the consumer.
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EVs for All? Pretty Soon.
The electric vehicle market is bound to see some exciting developments in the coming decade. The Indian EV industry seems robust and is moving towards consistent growth every year.
With the right foundation already being set up, it's now time to look at how the Indian automotive market is able to bring its EV offerings to its prospective customers.
As the Indian carmakers are seizing this opportunity, policymakers and government is mulling over consistent measures that can incentivise EV buyers. All of this comes with a large network of EV chargers, a reduction in battery costs and lots more.
The consumers are smarter and know the right choices to make.
Hence, the right mix of government support, and competition among carmakers to provide the best possible product to their customers might be the right mix to ensure that a sustainable EV market is created in the long run.