Rating agency ICRA said domestic entry on Monday said electric vehicles (EVs) would remain low in the medium term in segments such as passenger vehicles and commercial vehicles due to high prices and lack of financial incentives from the government.

ICRA said in a statement that until the specifications of the batteries are standardized, standardization of battery specifications, including charger specifications at original equipment manufacturers (OEMs), is not successful.

While rejecting any meaningful domestic penetration of EVs in major automotive segments such as PV (passenger vehicles) and CV (commercial vehicles), the ICRA cited high prices from the government to encourage and the absence of strong direct and indirect financial incentives. gave. Adopt EV.

“Currently, the FAME II incentive for electric passenger vehicles (PVs) is limited to the commercial taxi segment only, highlighting GoI’s (Government of India) awareness of EVs for individual car buyers in the near-medium Will stay away Term, ”ICRA said.

The rating agency further noted that the modernity of vehicle financing in the battery-swappable model, where core batteries are owned by third parties and financiers only have control over the residual vehicle, is another challenge.

In addition, it stated that EV vendor systems require substantial investment to keep costs under investigation and reduce reliance on imported electronic systems.
ICRA believes that automobile swapping will cause automobile OEMs to face strong resistance due to the potential impact of their product differentiation capabilities, as well as pricing flexibility.

Its acceptance will therefore be limited to some less complex automotive sub-segments, like three-wheelers.

The rating agency stated, “Given the importance of battery hardware and software in the overall performance of the EV, battery swapping will face strong resistance in technically complex products.”

ICRA Vice President and Co-Head Ashish Modani said, “The price sensitive nature of the Indian market means that EVs need to be competitively priced, which in turn calls for ‘economies of scale’.”

He added that EV prices are currently higher than internal combustion engine (ICE) vehicles. This combination coupled with the lack of public charging infrastructure has resulted in minimal EV penetration into the country.

Modani said, “Government support in the form of direct / indirect financial incentives and supportive regulation will be important to gain traction in the Indian market.”

Automotive sub-segments such as three-wheeler (3W), two-wheeler (2W), intra-city bus and small commercial vehicle (SCV) are likely to emerge as early adopters due to the comparable total cost of ownership of their ICE counterparts, He added.

“EV penetration in passenger vehicle (PV) and heavy trucks segment is likely to remain low. Over the next five years, EVs will account for 8–10 per cent of new vehicle sales in 2W and intra-city buses, while its Modani said the PV segment will hold around 3-5 per cent.

He said the three-wheeler segment could see a rapid transition in new vehicle sales with EV penetration by 2025.

News Source: EconomicTimes

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