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Did Electric Vehicle Transition Gain Speed In 2022? According to Vahan, a portal that tracks vehicle registrations, 9,49,547 electric vehicles were registered in India in 2022

By S Shanthi

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30 per cent in private cars, 70 per cent in commercial vehicles, and 80 per cent in two and three-wheelers by 2030. That is the target set by the central government for electric vehicle (EV) penetration in India.

In August this year, Prime Minister Narendra Modi said EVs are bringing a 'silent revolution' in the country. "Be it two-wheelers or four-wheelers, they don't make any noise. This silence is not only about its engineering, but also the beginning of a silent revolution in the country," said PM Modi.

In 2022, how close did we get to this revolutionary mission of moving from ICE to EVs?

EV transition in 2022

According to Vahan, a portal that tracks vehicle registrations, 9,49,547 electric vehicles were registered in India in 2022. "While the overall pie remains small as compared to ICE but the transition is looking smooth. We are increasingly seeing businesses and even end users showing a clear preference to buy EV vehicles," said Mitesh Shah, co-founder, Inflection Point Ventures.

As the fight against climate change sharpens, India is getting closer and closer to transitioning to electric mobility with each passing day. And, 2022 was no different. Overall, EV vehicle sales across segments (2W, 3W, 4W and e-buses) grew by 110 per cent in FY22 as compared to the previous year. Around 5.2 lakh units sold across segments in FY 22.

"Aggregate EV sales for 2022 are likely to be >2X of 2021, with strong growth momentum across all categories. With a rapidly maturing ecosystem - constantly improving battery technologies, supporting infrastructure for charging, homegrown manufacturing and component suppliers, policy support - we think the EV juggernaut is just getting started and adoption will continue to increase over time," said Arpit Maheshwari, Principal, Stellaris Venture Partners.

Impact of fire incidents

Even though there is a more or less collective agreement between various stakeholders on EVs being the best solution to the climate crisis, 2022 started on a negative note for the EV industry, with fire incidents being reported often. It all began in March this year when an Okinawa bike went up in smoke and killed a father and his 13-year-old daughter. This was followed by a spate of incidents involving EVs from Ola Electric, HCD Indiam PureEV, HCD India and a few others. These incidents led to many questioning the safety of EVs.

"There were few fire incidents last year. The reason for the same is mainly due to cell chemistry, Battery Management System and battery cells reacting to climate conditions. The Government has strengthened the approval process with respect to safety and advised the use of quality parts by the OEMs and exhaustive quality checks. Such a framework in place is needed for any new industry to flourish and meet the necessary safety guidelines. After a few unfortunate incidents, we are seeing a renewed interest in the EV segment from all stakeholders," said Shah.

The demand for two-wheeler EVs got affected due to safety concerns and there was a month-on-month (MoM) decline in two-wheeler EV registrations in April and May. But it saw a rise in June. Only the companies involved in the fire incidents continued to see a fall in registrations. For instance, Ola Electric's E2W saw its vehicle registrations drop over 27 per cent to 9,255 units in May from 12,703 units in April, according to Vahan.

However, things came back to normalcy after consumers saw that many other players in the E2W Segment alone, such as Revolt, Ather Energy, TVS Motor, Bajaj Auto did not face such issues. "Local climatic conditions do impact vehicle performance, and high-quality manufacturers have always been cognizant of the same," said Maheshwari.

This, along with the government's action against those who were at fault helped gain trust. For instance, E2W makers were also told to recall the entire batch of vehicles if one vehicle from the batch was involved in a fire incident. The government also reportedly sent show-cause notices to Ola Electric, Okinawa Autotech, Pure EV, and other original equipment manufacturers (OEMs) asking them to detail the reasons for the fire incidents. The government also started looking at preparing battery standards for EV manufacturers.

In addition to that, many EV manufacturers became more cautious about keeping Indian climatic conditions in mind while making for Indian roads. "OEMs will need to focus on procurement from high-quality suppliers and more exhaustive quality checks to prevent these incidents going forward. Additional focus on R&D and customization of batteries for a tropical climate is essential as most of the R&D development on batteries happens in countries that are present in temperate regions," said Shah.

PE and VC investment in the space

Experts say that investment in the space continues to be strong. "2022 PE / VC investment is expected to top $1B, and most major OEMs have announced significant capex plans during the year. In our view, market appetite - both public and private - for EV companies will continue to be strong given the size and long-term nature of the opportunity," said Maheshwari.

43 startups in the space have raised funds in 2022 amounting to $673 million till September 2022. The sector also saw four acquisition deals by large players. In addition to this, experts expect four unicorns in the near future. "As of now, the funding is ahead of what was done in FY2021 (47 deals amounting to $573 mn)," said Shah.

Segments with high revenue pool and penetration

E2W reportedly did the maximum revenue. Out of the overall sale of 5.2 lakh units of EVs, E2Ws were around 3.2 lakh units. "It is due to access to a lot of players, charging infra being easy for 2W (swappable batteries or home charging), price points, access to credit, etc," said Shah.

However, while 2Ws drive volumes, currently the highest EV penetration is in the 3W category across both passenger and cargo vehicles, where EVs have 55 per cent and 35 per cent market share, respectively. "That is not surprising, since the economics for a fleet operator are compelling, and we expect the share of E3Ws to increase further in 2023. Share gains will be seen across form factors e.g. in 2Ws, EVs now make 4.5 per cent of new sales, compared to less than 2 per cent a year ago," said Maheshwari.

EV state policies

This year too, many state-level policies continued to boost the EV transition. In April, the Maharashtra government announced its plans to create an EV-focused fund to aid EV startups scale their operations in the state. In July, Chhattisgarh Chief Minister Bhupesh Baghel approved Chhattisgarh Electric Vehicle (EV) Policy 2022. A month before that, the Haryana government also approved its EV Policy 2022 which also includes many financial incentives for EV manufacturers. According to JMK Research report, the electric two-wheeler (2W) industry accounted for 55 per cent of the total EV sales in FY22 alone.

Around 18 states have finalized EV policies so far. These include Andhra Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, New Delhi, Tamil Nadu, Telangana, Uttarakhand, Uttar Pradesh, Goa, Gujarat, Meghalaya, Assam, West Bengal, Odisha, and Rajasthan.

S Shanthi

Former Senior Assistant Editor

Shanthi specializes in writing sector-specific trends, interviews and startup profiles. She has worked as a feature writer for over a decade in several print and digital media companies. 


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