India has set for itself a rather steep and may be an impossible goal of adopting all-electric mobility by 2032 and according to a report by the UBS, the goal is “very challenging” considering a huge number of factors.
Battery costs have been falling rapidly, but the cost decline isn’t being transferred to electric vehicles. The reason is that batteries though an important part of an electric vehicle, aren’t the only thing affecting pricing of EVs.
According to UBS, long-range electric vehicles will remain too expensive for mainstream adoption without major government subsidies. If we look at the median car pricing in India, petrol and diesel based cars now costs only USD 10,000 (ex-showroom) while, even in 2025, UBS expects a long-range EV (380km) to cost about USD 21,500 and a moderate-range one (190km) USD 16,000, given UBS’s forecast of a USD 130/Kwh battery cost by 2025.
“We believe greater government investment will be needed to make EVs more attractive to consumers and manufacturers, but the government has limited fiscal space and other priorities, so larger incentives to use EVs seem unlikely,” the report said.
UBS further added given its fiscal constraints, the government should offer more incentives to improve the viability of hybrid electric vehicles (HEV) and plug-in hybrid electric vehicles (PHEV) as they use smaller batteries, are not constrained by weak charging infrastructure, and the move should result in development of a supply chain that will eventually be a stepping stone to battery electric vehicles (BEV).
Though solar power generation should grow rapidly, UBS sees India’s power-generation mix too coal dependant to drive a reduction in emissions, even if EVs were widely adopted. According to a separate UBS Evidence Lab survey in 2016, top concerns about EVs were high cost, limited single charge range, limited charging infrastructure and battery life. “We believe these concerns are universal, but are more acute in India given the low affordability and low price points in the market,” the report said.