Researched by: Vagda Galhotra & Sara Varghese

First, the basic deets

Here’s what you need to know about the EV market in India:

• The Indian automotive industry is the fifth largest in the world and is slated to be the third largest by 2030. 
• In 2017, the government announced that all our vehicles will be fully electric by 2030. That target has now been revised downward to 30% of private cars, 70% of commercial vehicles, 40% of buses, and 80% of 2-wheelers and autos.
• But in 2020-21, EVs accounted for barely 1.3% of total vehicle sales in India—a jump from the 0.4% in 2017, but still meagre. In comparison, EV sales in China (12%), Europe (15%) and even the US (3%) are far higher.
• Two-wheelers are the most popular purchase and account for 61% of all EV purchases. But these are mostly e-scooters (98%) not e-bikes (2%). Their sales jumped by 132% in 2021. 
• The top brand: Hero Electric, with 34% of the market share, followed by Okinawa (22%) and Ather (12%). 
• Ola started selling electric scooters last year—and produces 1,000 a day—which is still way below its target of two million a year.
• On the electric car front, Tata plans to launch three affordable electric cars in the less-than Rs 10 lakh range in the coming 12-18 months—and aims to sell 50,000 units.
• Data point to note: One million EVs have been sold in India over the past 15 years. The industry expects to sell one million in just 2022. 

The key takeaway: So while the numbers are low, the growth projections are rosy. That’s why the likes of Ola and Tatas are scrambling to get in the game. But the challenges of going fully—or even partly electric remain daunting.

Challenge #1: Costs

Recent government subsidies and incentives have brought the price of buying an EV considerably down. However, electric two-wheelers are still not as cheap as their petrol counterparts—ranging from Rs 74,000 to 148,000—and there are very few options for an e-car that costs less than Rs 15 lakhs. Presumably, Tata Motors plans to change that this year.

But, but, but: Most of the components of an electric vehicle are imported—and account for 60% of a vehicle's manufacturing cost. The most expensive component: the lithium ion battery which accounts for 40%. Worldwide demand for metal was about 350,000 tons in 2020—and will be six times higher by 2030. But most of the world’s supply comes from a handful of countries: Argentina, Chile, Australia and China. And its prices have been rising this past year primarily due to demand from Chinese battery makers.

A soaring price tag? A recent report warned that rising lithium prices will push up battery costs—and may put the dream of the affordable EV out of reach—not just for India but also any other country that has to import the stuff, including the US. An investment analyst says:

“They (the leaders) are ignoring the trillion-ton elephant in the room. Carbon-free power and gasoline-free transportation cannot exist without mining an absurd amount of lithium. Right now, production is not even close to keeping up. We simply aren’t pulling enough lithium out of the ground to match the projected demand.”

Not just lithium: While lithium represents about 7% of the total cost of a battery, it also requires other metals like nickel, manganese and, importantly, cobalt: “Cobalt is used in the cathode, and the cathode is the most expensive part of a battery, which is in turn the most expensive part of an EV.” Their supplies are precarious as well.

Point to note: Right now, experts estimate that India will have to spend upwards of $65 billion a year to go fully electric. But that figure may be much higher if there are problems with supplies of the required metals.

Challenge #2: Charging

India will need 400,000 charging stations by 2026 to meet the demand for two million electric vehicles on the road. Right now, we have a total of 1,640. So that’s a big leap—that will not be easy to make. And here’s why. An EV owner typically needs a charging station at home and at the office—which are the primary destinations. But installing one in those locations isn’t trivial. 

For starters, not every company has a dedicated parking lot where these can be installed. But the challenge is even greater in residences: “[T]he challenge is that the typical power load available at my home is around 5 kilowatts or a maximum of 7.5 kilowatts (kW). Our homes require load enhancement because vehicles of the future are going to require anywhere between 7kW and 22kW.” The problem is the same with installing public chargers on highways for long-distance trips: “These chargers range between 50kW and 60kW. But the roadside dhaba where a charger might be needed would typically have only a 7 to 15 kW load.”

Range anxiety: Without charging stations, adoption will be even slower because owners are afraid that their batteries will die before they reach their destination.

Point to note: The higher need for electricity also makes EVs far less eco-friendly than advertised—at least in the short run. The reason: The batteries charge on power that is coming straight off the electric grid—which is powered by fossil fuels. While EVs do drastically reduce tailpipe emissions, they will not be truly effective in saving the environment until the sources of our electricity are also green. 

Challenge #3: Safety

So far, two key safety issues have emerged with Indian EVs.

One: There are problems with the software—at least in the case of Ola. A Morning Context investigation revealed multiple, often dangerous, issues faced by owners. For example, suddenly stalling in the middle of traffic—or driving backwards on a slope. The reason in most cases: software bugs—which experts say point to “a deeper hardware and engineering problem”—likely caused by a rush to roll out the e-scooters: 

“[I]t must be reiterated that one can’t run an EV like an app. If an app crashes, it is okay, but if the processes of an EV are not controlled by the correct software, it could cause a range of problems—from a minor issue like the wrong indicator blinking to a potentially life-threatening incident like the vehicle suddenly losing power.”

Also, it shows that the company has not done the work of adapting global products to an Indian context: 

“The standard followed by the rest of the world is not good enough for India. You can’t cut-copy-paste the GM or the Toyota standards because the road condition, dust, heat, etc., are much worse in India and, therefore, we need far more stringent standards.”

Two: This absence of any effort to account for Indian conditions is especially clear in recent cases—where e-scooters are spontaneously catching fire. Over the past week, this has happened in Chennai, Pune and Vellore. See the latest example below: 

Each incident involved a different brand—Ola, Pure EV and Okinawa—suggesting that the malaise is industrywide. The culprit is the lithium ion battery—which is the most complex part of the EV: “the vehicle's overall safety depends on the efficiency of the battery management system—how well the battery is cooled and how good the insulation of the pack is from outside elements.”

Battery choice: Most EVs use the NMC version of these batteries—whose cathodes are made of Lithium, Manganese, and Cobalt. These offer more bang (energy) with the same amount of battery—but are far less stable:

“NMC batteries are denser and therefore, offer a longer range than LFP batteries. However, their lower thermal runaway threshold means that the risk of these batteries malfunctioning is higher. This gets worse in the Indian climate, where the temperatures inch close to 50 degrees celsius in certain parts of the country in the summer.”

And here’s what happens inside the battery when temperatures rise:

“When the temperature in the surrounding [area] is higher than the battery’s internal temperature, cells start to get heated. Once the internal temperature gets to a certain level, it triggers a reaction of the cathode with the electrolyte. This leads to the production of more heat energy leading to increased pressure above the standard limit. In response, the cells begin to yield to the pressure by spilling content that might catch fire or even explode.”

Point to note: It’s not just Indian conditions or companies that are struggling with battery issues. In 2020, Chevy recalled every one of its 142,000 Bolts because of fires. In 2021, Hyundai recalled 82,000 Konas due to defects in their battery cells. 

The bottomline: There is no doubt that Electric Vehicles are the future—and necessary to save our planet. And every new transport technology has its teething problems (see: planes, trains and petrol-powered automobiles). This is just the beginning of a long ride.

Reading list

Economic Times and Scooter Guide offer detailed explanations as to why lithium-ion batteries catch fire. Forbes has a must-read piece on how lithium prices will affect the EV industry. The Morning Context (paywall) has more on Ola’s software problems. Economic Times also has a good overview of the two-wheeler industry in India—and its future. The Better India has an informative interview with an EV charging company founder—who lays out the challenges of expanding the number of stations. New York Times has more on the global race to capture the EV battery market.