The government of India introduced the electric car revolution in 2017 with an aim of 100% electric cars in the Indian market by 2023. The EV market in India has experienced considerable growth since then, in both commercial and domestic segments. According to research, India’s EV market is expected to have a 42.38% CAGR by 2025.
In such a scenario, it is crucial to answer whether India is ready for EVs in the commercial segment yet. Read on to find the answer!
What are the Opportunities for Electric Vehicles in the Indian Market?
Here are some of the favourable conditions for electric commercial vehicles in the Indian market:
● Government Initiatives and Promotions
The Indian government has introduced several policies and incentives, such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME), to encourage the manufacturing of EVs. Moreover, various government incentive programs have reduced the EV price, allowing more businesses to incorporate EV commercial vehicles.
● Higher Consumer Interest
The ever-increasing fuel costs and growing awareness among consumers about the environmental impact of using fossil fuels have also encouraged EV manufacturing. With the introduction of three-wheeler electric vehicles, the adoption of EVs in the commercial sector has also noticed considerable growth.
● Advanced Battery Technology
Lithium iron phosphate (LFP) and solid-state battery technologies are expected to increase the range, lower costs, and improve the efficiency of electric vehicles. As these developments reach India, Indian consumers will find electric vehicles more appealing and useful.
● Developing Infrastructure
Increasingly, EV charging stations are being established in India to encourage the purchase of electric vehicles across both commercial and domestic segments. Though the number is significant, the Indian market needs to scale up this growth in future to meet the growing market needs.
● Increase in Corporate Adoption
Many Indian businesses are transitioning to electric vehicles to reduce fuel costs and contribute to environmental sustainability. This shift is making EVs more visible and driving the growth of charging infrastructure to support corporate fleets.
Government Initiatives to Encourage Electric Vehicles in India
The government of India has adopted several initiatives to boost the EV market in India. Here are some of them:
- Subsidies have been increased to encourage more people to purchase electric vehicles. Three-wheelers and passenger cars receive Rs 10,000 per kWh of battery, while two-wheelers can receive up to Rs 15,000 per kWh, or 40% of the total cost.
- The customs duty on lithium-ion batteries for electric vehicles has been lowered to 13%. Additionally, natural gas and biogas now benefit from an excise duty exemption, making these energy sources more affordable and attractive.
- ₹35,000 crores have been invested in energy transition projects. This will benefit stakeholders like JSW Steel, NTPC, and Tata Steel.
- ₹19,700 crores have been invested in hydrogen fuel to ensure cleaner energy sources.
- Industry leaders are calling for several measures to accelerate the growth of electric vehicles in India. Their expectations include extending the FAME II subsidies, lowering GST on lithium-ion batteries and cells from 18% to 5%, expanding the benefits of the Production Linked Incentive (PLI) scheme, and easing FDI rules to attract more investment and increase demand for EVs.
Can EVs be Insured with Commercial Vehicle Insurance?
Commercial EV owners can purchase auto, lorry, or truck insurance as per their vehicle type to insure their vehicles. Like any other commercial vehicle insurance, you can buy either third-party or comprehensive insurance for your commercial EVs.
The third-party insurance will cover your liabilities to third-party vehicles or persons caused by your vehicle during an accident. However, if you want extensive coverage that covers your vehicle and your losses, you can opt for comprehensive commercial vehicle insurance.
What are the Challenges of Commercial EVs in the Indian Market?
Despite the initiatives of the government and other business giants, the EV market in India faces the following challenges:
● Vehicle Range
Many people hesitate to switch to electric vehicles because they worry about the car’s range and battery life. The limited number of charging stations means EV owners often need to cover long distances on one charge, which isn’t practical with the current battery technology in most electric vehicles.
● Charging Time
Customers prefer quick charging for their electric vehicles, but current charging technologies in India do not support fast recharging. As a result, people who need to charge their vehicles quickly or have busy schedules may be reluctant to buy electric vehicles, as charging can take longer than they would like.
● Charging Points
One major hurdle for electric cars in India is the shortage of charging stations, particularly outside major cities such as Delhi and Mumbai. Most areas still lack sufficient charging points, and those that exist rarely support fast charging, resulting in lengthy battery charging times for EV owners.
● Import Dependency
India relies heavily on imported components, such as batteries, for electric vehicles. To boost EV adoption and make them more affordable, it is crucial to develop a robust local industry for EV parts and increase domestic manufacturing, thereby reducing dependence on imports and supporting the country’s electric vehicle goals.
● High Upfront Costs
Even with government subsidies, electric vehicles in India remain more expensive than traditional cars. High battery costs are a major reason for this, making EVs less affordable, especially for low-income buyers, and limiting widespread adoption despite available incentives.
Considering the challenges and following the legal requirements, it becomes necessary to insure your commercial EV with the right insurance policy. Read on to explore the insurance options for commercial EVs.
Image by 政徳 吉田 from Pixabay (Free for commercial use)
Image published on September 22, 2020
