Understanding Demand Drivers for Electric Mobility in India

5 October 2018

In the wake of the MOVE Summit, Nehmat Kaur, Senior Manager of South Asia Government Relations, The Climate Group, writes on how subnational governments and businesses can accelerate a future of electric transport by sending powerful demand signals to the market.

India is leading an electric mobility revolution. The government sees the electrification of transport as an opportunity to build a manufacturing base in the country, with significant economic and employment benefits, but also as an opportunity to address challenges of air pollution from transport emissions in India’s choked cities.

The market, however, is only emerging and despite support, it needs impetus from the demand-side to foster a strong supply chain. Suppliers in India need to see significant demand in the electric mobility market before they decide to invest in capital-intensive electric vehicle (EV) manufacturing lines. While the cost of EVs has fallen steadily over the last four years, economies of scale will help make electric vehicles more affordable for the retail consumer.

To help us get there, businesses and subnational governments are playing a major role in driving early demand and rolling out the ecosystem infrastructure needed to support further acceleration of electric transport systems.   

"Businesses and subnational governments are playing a major role in driving early demand"
Nehmat Kaur, Senior Manager of South Asia Government Relations, The Climate Group

Key demand drivers for electric vehicles in India

State governments: Indian state governments such as Gujarat, Andhra Pradesh, Karnataka, Maharashtra and West Bengal are taking a lead. Gujarat is going to be a manufacturing hub and has attracted large investments from car and batter manufacturers. Andhra Pradesh is working to procure electric vehicles and switch their government fleets to electric. The state is collaborating with EESL and is planning to invest INR 10,000 (USD $1.4billion) to deploy 100,000 EVs. Karnataka and Maharashtra are the first Indian states to come up with EV policies, highlighting their priorities on EV adoption.

Gujarat and West Bengal are also participants in the Under2 Zero Emission Vehicle Project, which supports state and regional governments to increase the number of zero emission vehicles on their roads. The project offers them the opportunity to network with other subnational leaders, share experience and identify innovative policies to accelerate the uptake of zero emission transport.

Companies: Indian businesses are driving demand for electric vehicles by joining The Climate Group’s EV100 initiative to accelerate a future of electric transport. Leading corporations such as the State Bank of India, Wipro and BSES Yamuna (BYPL) have committed to transitioning their corporate fleets to electric vehicles by 2030, as well as installing workplace charging infrastructure to further accelerate the market. They are positioning themselves at the forefront of innovative business models, enhancing brand perception and increasing staff and customer satisfaction.

Cities: Cities in India are working to accelerate the shift to plug-in electric public transport. Bangalore, Chennai, Delhi and Kolkata are working with C40 to fully switch their bus fleets to electric by 2030, creating demand for 85,000 buses. City leadership is a big step in the direction of sustainable urban transport. 

"For transport to truly be a low-emission sector, electric vehicles must be powered by renewable energy"
Nehmat Kaur, Senior Manager of South Asia Government Relations, The Climate Group

Powering the EV market

Electric mobility represents one of the most promising technologies to green transportation systems. However, an important issue to address in the electric transport revolution is that a high penetration of electric vehicles places a heavy electricity demand on the grid.  

One effective way to manage the extra capacity needed is to integrate local power generation such as renewable energy sources into charging infrastructure. For transport to truly be a low-emission sector, electric vehicles must be powered by renewable energy – distributed or at utility-scale.

The RE100 initiative, led by The Climate Group in partnership with CDP, now brings together more than 150 companies committed to source 100% renewable electricity, accelerating the demand for – and delivery of – clean power to grids worldwide. Companies such as IKEA Group are showing ambitious leadership by joining both EV100 and RE100, rolling out electric vehicles at the same time as ensuring they will be powered by renewable sources.

For an economy as large as India to transition to cleaner energy sources, electrification of major energy consuming sectors must be the first big step. Using clean energy to power the industrial, transportation, residential and commercial sectors is key to developing clean and healthy cities and communities for the future.

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