In 5 Years, 20-30% of New Vehicle Sales To Be CNG, EVs & Hybrids: ICRA

Currently, the share of EVs in the overall passenger vehicles industry remains low, at 1 per cent. However, the proportion of CNG, EVs and hybrid vehicles is expected to increase 20-30 per cent of new vehicle sales in the next five years. "We expect the proportion of CNG, EVs, and hybrid vehicles to increase to 20-30 per cent of new vehicle sales in the next five years. However, petrol-based vehicles will likely account for a significant portion of new PV sales over the medium term. This makes it important to reduce emissions from petrol-based vehicles to meet the CAFÉ norms and start the trajectory towards achieving carbon neutrality over the medium-to-long-term, besides promotion through the adoption of alternative powertrains, including EVs and hybrids," said Shamsher Dewan, senior vice president and group head, ICRA Limited.

The Indian automobile industry is witnessing major technological transitions, especially with respect to emissions and safety. Petrol remains a fuel of choice in the domestic passenger vehicle market, as stricter emission norms and the narrowing price gap between petrol and diesel has reduced the viability of diesel vehicles. CNG vehicles have also gained prominence in recent years, aided by favorable running costs, improving penetration of CNG dispensing stations across the country, and enhanced product offerings by original equipment manufacturers (OEMs). Ethanol blending would reduce vehicular emissions, strengthen energy security, help reduce oil imports and conserve forex reserves. Ethanol blending in petrol has been gradually increasing in the last several years and India achieved 10 per cent ethanol blending in 2022.

Further, the government of India has advanced its target for E20 implementation to 2025 from 2030 earlier. Adding further, Dewan said, "ICRA believes that the readiness of the auto industry and the OEMs to meet E20 blending norms is unlikely to be a major challenge. No major design changes are required from a vehicle standpoint except material recalibration, and the impact on the vehicle cost is expected to be less than 1 per cent in the case of passenger vehicles and about 2- 3 per cent in the case of two-wheelers."

Loss of fuel efficiency is expected as vehicles transition from the E10 to E20 compliant design, and this would increase the total cost of ownership (TCO). However, OEMs are looking at technological improvements like light-weighting to offset the impact. Operating E10-compliant vehicles with E20 fuel would result in corrosion of certain engine components, and there would be requirements to replace the corroded parts during the vehicle lifecycle. "Making adequate ethanol available pan India and addressing portability challenges would be imperative, given that ethanol production is currently concentrated in select states such as Uttar Pradesh, Karnataka, and Maharashtra, owing to feedstock availability."