Growth in e-engines to come from 2-wheelers

Mumbai: Two-wheelers and three-wheelers would be the first to adopt electric vehicle engines in a big way followed by intra city buses and corporate cabs as India transitions from combustion engines to electric engines.

The primary reason according to Ernst & Young is economics that EVs offer over combustion engine vehicles as fleet owners base their purchase criterion on the total cost of ownership (TCO) and not just the acquisition cost of the vehicle.
E&Y  observed that the two-wheeler and three-wheeler segments offer a huge opportunity for electrification in India given it is the world’s largest two-wheeler market as well as one of the biggest markets of three wheelers. These are widely used by masses for mobility and cargo transportation.

The electric two-wheeler segment has already demonstrated its potential in FY12, when it clocked sales of 90,000 units. Corporate passenger vehicle fleets, which have a defined route and operations in a limited geography are likely to be more willing to adopt EVs while retail customers are likely to be the last in line to adopt.  

For a commercial user of a passenger vehicle, the differential in acquisition cost can be recovered in around 5 years due to lower operational expenses, E&Y said. TCO of an electric car is currently 37 per cent more than an ICE car for a private user.  

Post the implementation of BS-VI emission norms in 2020, petrol and diesel PVs are expected to get pricier by 8-15 per cent reducing this differential to only 14 per cent.

Intra-city buses is another segment which is amenable for electrification as the route predictability is very high, thus enabling the development of charging infrastructure on the route/bus depots.

However, high cost of e-buses due to heavier and pricier batteries remains a challenge. While the truck segment makes more economic sense to electrify because of the fixed routes and larger distances covered, the high battery capacity requirements and uncertainties around decline in residual value with decline in battery costs are impediments to their electrification.  

“The growth of EVs in India will witness differential growth patterns across cities, vehicle segments and vehicle applications. In terms of vehicle segment and applications, shared vehicles and fleets will offer a better value proposition for all stakeholders – manufacturers, as higher volumes can help them achieve scale as well as fleet operators because the TCO of EVs is lower than the internal combustion engine vehicles (ICEVs). The current cost dynamics of an EV used for commercial purposes are quite comparable with the total cost of ownership of an EV merely 12 per cent more than that of a comparable ICEV. This would further change in favour of EVs as post the implementation of BS 6 norms, the TCO of an electric car is expected to be 4 per cent lower for a commercial user,” said Rakesh Batra, partner and india automotive sector leader, EY.