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The transition of petrol vehicles to EV – Growth in EV market

The Transition of Petrol Vehicles to EV

The EV market is booming because of factors like global warming and climate change. One of the driving forces behind this is the climate change goal of keeping global warming below 2-1.5 degrees celsius. This has increased the global demand for sustainable, fossil-free vehicles to tackle climate change. Traditional fossil fuel is one of the leading contributors to air pollution, and thus to lower pollution, non-traditional and sustainable forms of transport such as EVs are becoming a viable option to prevent the emission of greenhouse gases.

Further, the need to transition from petrol vehicles to EVs is necessary due to the demand from citizens. These demands have often translated to climate change summits and policies for sustainable growth. The COP26 is the most recent agreement signed among various countries of Europe, North and South America, and Asia, in which India was also a participant.

 

These measures have rapidly transitioned from conventional fossil fuel vehicles to EVs. In 2018 the total number of EVs sold in the US increased from 3.4 million to 5.6 million, which was a 64% growth in the EV market in the US. Similarly, other countries, particularly in Europe, have seen similar trends in the use and growth of EVs. In 2019 in Norway, the new car sales comprised 58% EVs, followed by Iceland and Sweden, which had 18% and 11% sales, respectively. Even in the Asian subcontinent, China is the leading user of EVs in the world, with 66% of its vehicles being electrical.

 

In India, the projected growth in the EV market is estimated to be $150 billion by the year 2030. In the year 2021 alone, India reported the sale of 300,000 EVs, which is a significant number considering it is in its early stage of infrastructural development in the EV segment. Further, the launch of e-portals such as the ‘e-Amrit’ shows the government’s interest in facilitating the EV market’s growth.

 

Apart from the organic growth seen in the EV market, additional schemes and benefits to the user of EVs have significantly impacted people’s outlook and convenience. At the national level, the FAME or Faster Adoption and Manufacturing of (Hybrid and) Electric vehicles scheme provides tax incentives for all categories of vehicles, from two-wheeler EVs to E-buses. The tax incentives range from Rs. 10,000 per kWh up to Rs 20,000 per kWh. Along with such incentives are initiatives like setting up charging stations and the Phased Manufacturing Programme (PMP).

At the state level, there are policies in place that provide for 100% exemption from the registration fee of a new EV, along with 100% road tax exemption. The states also provide other tax incentives similar to the national schemes for purchasing EVs. Many schemes and effective policies have helped the Indian EV market grow exponentially. This growth has translated into companies investing in EVs and the emergence of many market players for the segment, both domestic and international. These companies have contributed to manufacturing and selling battery units and EVs. Other federal policies and schemes from the Ministry of Road Transport and Highways, NITI Ayog, and the Department of Science and Technology are also ushering the way towards electric transport and mobility.

In the domestic market, companies like Amara Raja Batteries are leading the manufacturing of components like lithium-ion batteries for EVs. They are also investing in green incentives to replace the traditional battery system, making the process cleaner and more sustainable. Eren Group, which acquired the Bangalore-based battery startup Pravaig, is a manufacturer of high-capacity batteries.

Ather Energy, India’s homegrown EV manufacturer, has been contributing highly to the two-wheeler segment of the industry. In 2021, Ather produced an estimated 0.11 million EVs for the Indian market. Ola, which made its debut in the EV market in 2021, set record sales of its electric vehicles worth $149 million. In recent years, traditional car manufacturers such as Tata Motors, Mahindra, and MG have also made their way into the EV market.

 

Apart from the transportation industry, one other industry that has greatly integrated this change is logistic services. As NITI Ayog had stated that EV logistic services could reduce up to 4% carbon emission, many logistic services are incorporating EVs in their fleet. Zypp Electric is one such logistic service provider aiming for a zero-emission goal and running a fleet of 3500 EVs. Zypp has partnered with some of the biggest companies such as Zomato, Swiggy, Myntra, Amazon, Flipkart, etc. It is gradually becoming a household logistics provider with an EV fleet. It also partners with companies such as Hero Electric to grow its fleet.

Team Zypp Electric
Team Zypp Electric

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