Under the ₹15,000 per kWh subsidy scenario, upfront cost parity for short- and mid-range E2Ws would be expected to emerge in 2025–27." However, it warns that under the current reduced subsidy of ₹10,000 per kWh, "the attainment of upfront cost parity would be delayed by 4 to 5 years."
12 Jul 2024 | 2650 Views | By Autocar Professional Bureau
As India pushes for greater adoption of electric vehicles (EVs), a critical question looms: When will EVs become cost-competitive with their conventional counterparts? A recent report by the International Council on Clean Transportation, titled "Electric vehicle demand incentives in India," provides insights into this crucial tipping point across different vehicle ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
As India pushes for greater adoption of electric vehicles (EVs), a critical question looms: When will EVs become cost-competitive with their conventional counterparts? A recent report by the International Council on Clean Transportation, titled "Electric vehicle demand incentives in India," provides insights into this crucial tipping point across different vehicle segments.
The report's findings suggest that while some segments are close to or have achieved cost parity, others will require continued policy support to bridge the gap with conventional vehicles.
In the two-wheeler segment, which dominates India's vehicle market, electric models are nearing cost parity. The report states, "Research published previously by the ICCT found that under the ₹15,000 per kWh subsidy scenario, upfront cost parity for short- and mid-range E2Ws would be expected to emerge in 2025–27." However, it warns that under the current reduced subsidy of ₹10,000 per kWh, "the attainment of upfront cost parity would be delayed by 4 to 5 years."
"If achieving cost parity with conventional two-wheelers is a government objective, a purchase subsidy of ₹15,000/kWh of battery capacity, capped at 40% of the ex-showroom price, could be offered initially and gradually reduced in accordance with EV cost reduction trends," it adds.
Electric three-wheelers, particularly e-rickshaws, have already achieved cost competitiveness in many use cases. The report indicates that with current subsidies, electric three-wheelers are cheaper than conventional models on a total cost of ownership (TCO) basis.
In the passenger car segment, the path to price parity varies by sub-segment.
In hatchbacks, the report's analysis shows that EVs are already cost-competitive on a TCO basis. TCO calculations take into account the total cost, including fuel and servicing, besides the upfront cost.
"When the subsidy is included, the electric hatchback is 13% cheaper than the gasoline model and 23% cheaper than the CNG model."
For sedans and SUVs, the picture is more mixed. For these, it notes, "on average, after the subsidy, the electric models in the sedan and SUV segment are 1–1.2 times the price of conventional models."
In the bus segment, the report highlights significant progress: "The per-kilometer price determined through the Grand Challenge procurement was 23%–27% lower than the prevailing cost of conventional buses in the corresponding cities; when accounting for the FAME subsidy, these prices were 31%–35% lower."
For trucks, the report recommends introducing subsidies to kickstart adoption, suggesting that significant incentives may be needed to achieve cost parity in the near term.
The report emphasizes that several factors will influence the timeline for achieving price parity, including battery costs, scale of production, policy support, and fuel prices.
As India aims to increase its EV market share from the current 7%, the race to price parity will be closely watched by industry stakeholders and policymakers alike.