EV penetration could reach 15 percent for two-wheelers, 25-30 percent for three-wheelers, and 5 percent for cars and buses by fiscal year 2026
Electric vehicles (EVs) offer nearly £3 billion in business for various stakeholders in India over the five years to fiscal 2026, a CRISIL analysis revealed on Tuesday (April 12). The segment is expected to be driven by shared mobility, battery swaps and ICE vehicle swaps alongside government support, it said.
The opportunity includes potential revenue of around £1.5 billion across all vehicle segments for Original Equipment Manufacturers (OEMs) and around £90,000 million in payouts for vehicle financiers, with the balance being shared mobility and insurance, the analysis shows .
CRISIL also does not rule out that by fiscal year 2026, EV penetration will reach 15 percent in two-wheelers, 25-30 percent in three-wheelers and 5 percent in cars and buses, measured by vehicle sales. According to CRISIL, adoption of electric vehicles continues to grow as more people move away from internal combustion engine vehicles (ICE).
Data on Centre’s Vahan portal shows that the share of electric tricycles (3Ws) has increased from less than 1 percent in fiscal 2018 to almost 5 percent of 3Ws registered last fiscal year.
For electric two-wheelers (2W) and buses, the percentages increased to just under 2 percent and 4 percent, respectively, according to the analysis, which also suggests that the shift isn’t limited to big cities either.
Smaller cities are also entering the fray, fueled by the government’s fiscal and non-fiscal measures, according to CRISIL’s analysis.
According to ‘Vahan’ statistics, in fiscal year 2021, the top 10 districts’ contribution to nationwide sales of electric cars and 3Ws has fallen from 55-60 percent in fiscal year 2021 to 25-30 percent in the previous fiscal year.
At 2Ws, the percentage went from 40-45 percent to 15-20 percent, it said. Rising fuel prices and government support have played a big role here. According to CRISIL, key programs such as Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-India), a phased manufacturing plan and Production Linked Incentive have propelled the country’s journey towards electric vehicles.
The advent of electric vehicles is an opportunity for existing and new industry participants to innovate and capitalize on rapidly evolving passenger and freight mobility. To address the challenges of the electric vehicle industry ecosystem, the government is considering introducing a structured battery replacement policy.
“Such simplifications will go a long way towards realizing the potential of electric vehicles. In addition, improving the availability of finance will drive EV adoption,” said Jagannarayan Padmanabhan, Director of CRISIL.
Startups with new-age business models as well as OEMs with established companies have expressed interest in manufacturing electric vehicles. Many state governments have also provided demand incentives and capital support for setting up greenfield manufacturing facilities, CRISIL said.
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In addition, analysis of the total cost of ownership suggests that electric two- and three-wheelers have caught up with ICE vehicles in the last financial year, even if they only travel 6,000 km and 20,000 km per year, respectively.
By 2026, the analysis shows that the acceptance of two- and three-wheelers will increase even without subsidies, since the operating costs are the same as ICE vehicles.
With cost parity improving and governments focused on vehicle electrification, we shouldn’t be surprised if EV penetration reaches 15 percent for two-wheelers, 25-30 percent for three-wheelers, and 5 percent for cars and buses in fiscal 2026 terms on vehicle sales, said Hemal Thakkar, director of CRISIL.
According to CRISIL, several new trends and business models are expected to emerge as all this growth materializes. Battery-as-a-Service and public charging stations typically have a pay-per-use model and aim to reduce the customer’s initial spend, improve profitability, address range fears and in turn increase asset utilization. it said.
Mobility-as-a-Service is another model that focuses on shared mobility by linking operations with charging infrastructure, according to the analysis, adding that vehicle and charging infrastructure are also provided on a pay-per-use basis become a model.
Then there’s micro-mobility, which enables last-mile distribution of cargo through micro-rental of electric 2Ws and 3Ws that operate on a self-drive rental model. The model is typically asset-light and based on open-source operations where the user can rent and deploy vehicles, they say.