Electric mobility has witnessed substantial growth in recent years, fueled by factors such as improved charging infrastructure, growing sustainability awareness, rising oil prices, technological advancements, startup innovations, OEM participation, and supportive government incentives and policies. While 21 Indian states have implemented their own electric vehicle (EV) policies to promote EV adoption, the transition to electric powertrains in the four-wheeler segment has been relatively sluggish. This article explores the four key reasons behind the slow adoption of electric four-wheelers in India.
- The Cost Factor: One major hurdle hindering the adoption of electric four-wheelers is the upfront investment, which is less financially appealing for consumers in price-sensitive markets. Battery packs, a significant component of EV prices, remain relatively expensive as EV technology continues to evolve. Moreover, the larger size and weight of four-wheelers require greater battery capacity for adequate range and performance, leading to higher costs. This price disparity results in electric four-wheelers being sold at a premium of up to 50% more than their internal combustion engine (ICE) counterparts, making them less affordable for consumers. The total cost of ownership (TCO) for electric four-wheelers increases significantly, especially for owners who do not exceed a daily travel distance of 100 km.
- Charging Infrastructure and Range Anxiety: Compared to three-wheelers and two-wheelers, the charging infrastructure for four-wheelers is less developed. Establishing widespread charging networks for four-wheelers requires substantial investment and planning, unlike their smaller counterparts, which are more easily accommodated due to their size and lower energy requirements. Additionally, range anxiety, which affects consumers differently in the four-wheeler segment, arises from longer commutes, intercity travel, and goods transportation. Meeting these demands necessitates higher range capabilities and advanced charging infrastructure, adding to the challenges faced by potential buyers of electric four-wheelers.
- B2B Dominance over B2C: Commercial electric vehicles (EVs) experience greater adoption in the business-to-business (B2B) segment compared to the business-to-consumer (B2C) segment. The high adoption of electric four-wheelers in the B2B landscape is justified by the fact that commercial vehicles often travel more than 100 km per day, making the higher TCO acceptable for business owners. Similarly, the operational costs of electric two-wheelers and three-wheelers are significantly lower than their ICE counterparts, driving their adoption in both B2B and B2C segments. However, the B2B use cases for electric two-wheelers and three-wheelers are more prevalent, especially in last-mile delivery and e-commerce sectors.
- Batteries, Chargers, and Lack of Subsidies: The slower adoption of electric four-wheelers can also be attributed to the lack of standardization for batteries and chargers, creating uncertainty and inconvenience for consumers. The complex sub-component system technologies and high R&D and manufacturing costs make it challenging for startups to venture into the electric four-wheeler space. Incumbent four-wheeler original equipment manufacturers (OEMs) have been slow in launching electric four-wheeler products to avoid cannibalizing their existing ICE products. Additionally, the lack of subsidies for four-wheeler vehicles under the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme further hinders their affordability and mass adoption.
In conclusion, the slow adoption of electric four-wheelers in India can be attributed to the cost factor, limited charging infrastructure, range anxiety, dominance of B2B adoption, lack of standardization, and the absence of subsidies for four-wheeler vehicles. As battery costs decrease, charging infrastructure expands, and automakers continue to innovate, the gap between EV adoption in four-wheelers and the success seen in two-wheelers and three-wheelers is expected to narrow, fostering a cleaner and more sustainable transportation ecosystem.