April 1, 2024, New Delhi: India few weeks ago approved a new electric vehicle policy to woo foreign investment from companies like Tesla with tax incentives to boost domestic production and emerge as an export hub. The plans are to lower import taxes on select EVs for companies committing to investments of over $500 million and establishing manufacturing facilities within three years, according to media reports.

The latest government move comes amidst EV growth projections in the next few years. India Briefing for instance has projected that the Indian EV market, valued at US$2 billion in 2023 could surge to US$7.09 billion by 2025, with the domestic EV market achieving 10 million annual sales by 2030.

Currently, the Indian electric car market is witnessing price cuts by automakers as they strive to lure more customers by making the vehicles more affordable. Electric cars currently account for just 2% of car sales in India due to the high cost, though more are being lured by lower running cost. Tata Motors is the latest to make its two popular EV models – Nexon.ev and Tiago.ev - cheaper by up to INR 1.2 lakh by passing on the benefits of a reduction in battery price, government initiatives and production efficiency. Recently, MG Comet’s prices were slashed between INR 90,000 - INR 1.4 lakh, while Mahindra XUV400 is reported to be gearing for a facelift and a fresh launch.

So far, the FAME-II (faster adoption of manufacturing of EVs) Scheme, which was launched in 2019, has been instrumental in boosting EV sales in India as it provided subsidies for the purchase of EVs, which has made them more affordable for price conscious consumers. The FAME-II subsidies end on March 31, 2024 and FAME-III is likely to be announced sometime post the general elections.

The India findings from the “2023 Global Automotive Consumer Study” by Deloitte has noted that the draw for EVs continues to center on the consumer perception that fuel costs will be significantly lower than ICE cars, outweighing the concern for climate change. Experts say people want to buy electric cars for the driving experience also as there is no engine sound and very little NVH (noise, vibrations and harshness) which makes the cabin very quiet and comfortable.

With a lot of conversations regarding electric vehicles taking place in the online communities on LocalCircles, the consumer pulse aggregator platform via a national survey attempted to quantify the interest level and concerns of people with electric cars. The survey received over 40,000 responses from consumers located in 319 districts of India. 63% respondents were men while 37% respondents were women. 42% respondents were from tier 1, 34% from tier 2 and 24% respondents were from tier 3, 4 and rural districts.

5% of the existing/prospective car owners are likely to buy an electric car in the next 12 months

Choice of a vehicle, including whether to buy it or not, is influenced by many factors. The survey first asked “What is the top reason that is limiting you from buying an electric car in the next 12 months” to which 18,919 responded. Among those surveyed 5% stated that the query is “Not applicable (I am likely to buy an electric car in the next 12 months)”. One in four respondents shared that they “don’t have a need to purchase any car at this time”. Apart from them, the rest pointed to different reasons why they have no plans to acquire an E-4W. Of them, 7% indicated “not enough choices of models in my budget”; 21% felt E-cars are “more expensive as compared to regular cars; another 21% are deterred as “there are not enough electric car charging stations in my area/ city/ town”; 12% admitted they “don’t know enough about these vehicles”; 3% indicated there were other reasons that were hindering any decision in favour of electric cars; 5% “don’t have the funds to purchase an electric car at this time”. To sum up, only 5% of the existing/prospective car owners are “likely to buy an electric car in the next 12 months”.

Car sales in India touched 4 million units in 2023 and 72,321 electric four wheelers were registered. If the 5% of the existing/prospective car owners as found in the survey buy one car each and the annual car sales maintains, it indicates demand of 200,000 electric cars in 2024.

55% of the (5%) existing or prospective car owners who are likely to buy an electric car in the next 12 months plan to spend INR 8-10 lakhs on it

The LocalCircles survey next sought to find out how much are these prospective buyers of electric cars (identified as 5% of the existing/prospective car owners) likely to spend on the vehicle. It asked them, “If you are considering buying an electric car in the next 12 months, how much are you likely to spend on it?” Of the 10,913 respondents to this query, 55% indicated their preference is for electric cars costing between INR 8-10 lakhs; 16% indicated “INR 10-15 lakhs; 13% are willing to spend between “INR 15-20 lakhs”; and 16% give no clear response. In effect, 55% of the (5% existing or prospective car owners) who are likely to buy an electric car in the next 12 months plan to spend INR 8-10 lakhs on it.

While operating costs of an electric car is much less than a petrol version, the time taken to offset the difference in purchase cost would take an average commute of 46km/ day or 6 years. For an average commuter, the distance travelled daily would be considerably less than 46km/ day or 16,790 km annually. As such for them the offset period may well be more than 6 years, which could explain one of the reasons for consumers’ hesitancy in switching over to electric cars.

75% of the (5%) existing and prospective consumers surveyed who are likely to buy an electric car want to do so primarily because they are fed up with rising fuel prices or want to contribute towards a cleaner environment

If the government policy continues to favour EV and other green fuel vehicles to combat air pollution issues would more people be willing to buy them? Reaching out to those who are keen to own an electric car, LocalCircles asked “If you are considering buying an electric car in the next 12 months, what is the primary reason for it”. Out of 10,683 who responded to this query, 44% or the largest section indicated “contribution to cleaner environment”; 31% have had “enough of buying (petroleum transport) fuel and coping with fuel price fluctuations”; 15% are attracted by “lower total cost of ownership”; 5% by “other reasons”; and 5% gave no clear indication. In effect, 75% of the (5%) existing and prospective consumers surveyed who are likely to buy an electric car in the next 12 months want to do so primarily because they are fed up with rising fuel prices or want to contribute towards a cleaner environment.

In summary, 5% of the existing or prospective car owners are “likely to buy an electric car in the next 12 months” but there are many factors that would influence the final purchase including competitive pricing or subsidies and adequate facilities for charging their cars. 55% of those 5% willing buyers indicated their preference is for electric cars costing between INR 8-10 lakhs, but for many of the respondents, lack of adequate choice in this price range is a hindering factor. The fact that 44% of those keen to buy electric cars feel they contribute “to cleaner environment” is a positive factor that should encourage policy makers and e-vehicle manufacturers to heed the consumers’ need by creating a robust charging infrastructure to support growing desire for electric cars. The survey has revealed that around 15% of the prospective buyers are not adequately aware about electric cars, which means there is need for more and better communications to raise awareness. India, a net importer of oil and gas, needs to do a reality check on EVs in the light of the global energy scenario which has seen most countries in Europe curb excess use of power by raising consumer charges several fold. In India, there have been ups and downs being witnessed in the sale of EVs particularly electric cars. Recently, the Minister of Road Transport also proposed a tax reduction for hybrid cars by over half which if implemented could impact sales of electric cars. The government needs to study the problems being faced by people if sales of electric cars are to improve and they are to become a first-choice replacement for petrol and diesel cars over time.

Just 5 per cent may purchase electric cars this year: SurveyApr 01, 2024Survey shows low current interest in electric cars in India, but potential demand for 200,000 units this year.https://m-www.localcircles.com/a/press/page/india-electric-car-survey-indian-expressarticleThe Indian Express

Just 5 per cent may purchase electric cars this year: SurveyApr 01, 2024Survey shows low current interest in electric cars in India, but potential demand for 200,000 units this year.https://www.thehindubusinessline.com/news/only-5-per-cent-may-purchase-electric-cars-this-year-survey/article68014957.ecearticleThe Hindu

Just 5 per cent may want to buy electric cars this year, most want EVs under Rs 10 lakh: SurveyMar 31, 2024Car sales in India crossed 4 million units last year while 72,321 electric four-wheelers were registered, according to the survey conducted by online consumer pulse aggregator platform, LocalCircles. https://www.businesstoday.in/auto/story/just-5-per-cent-may-want-to-buy-electric-cars-this-year-most-want-evs-under-rs-10-lakh-survey-423617-2024-03-31?utm_source=btweb_story_sharearticleBT

Just 5 per cent may purchase electric cars this year, most want EVs under Rs 10 lakh: SurveyMar 31, 2024The survey by LocalCircles said that just 5% may buy electric cars this year out of 4 million total car sales. Majority of the respondents were interested at Rs 8-10 lakh. Of the 40,000 respondents who participated in the survey, 42 per cent are from tier-1 cities, 34 per cent from tier 2 and the remaining 24 per cent from tier-3, 4 and rural areas.https://economictimes.indiatimes.com/industry/renewables/just-5-per-cent-may-purchase-electric-cars-this-year-most-want-evs-under-rs-10-lakh-survey/articleshow/108921484.cms?from=mdrarticleET