By Himanshu Kumar
Electric vehicle startups have been dominating the Indian EV market. After grabbing the initial momentum, what’s the way forward for a sustainable run and market expansion?
The global electric vehicle market was valued at $163.01 billion in 2020, and in 2021 over forty countries pledged to completely replace their use of ICE (Internal Combustion Engine) vehicles by 2050 with EVs.
Other developing countries are also working aggressively toward achieving zero-carbon emissions, the EV market is projected to surpass $823.75 billion by 2030, with a CAGR of 18.2% from 2021 to 2030. India’s position with respect to EVs has been encouraging; regardless of the covid-induced adversities, the Indian electric vehicle market was valued at USD 1,434.04 billion in 2021, and it is expected to reach USD 15,397.19 billion by 2027, registering a CAGR of 47.09% during the forecast period (2022-2027).
Challenges in the EV marketplace are quite recurrent and cause hindrance in terms of scalability for the manufacturers and broader acceptance amongst the masses. There are three critical challenges in today’s EV market, national and international.
- Infrastructure Development: The required infrastructure for the operations of EVs, such as their charging stations, battery swapping stations, and manufacturing plants/service centres, all of them, need heavy capital to install from a producer standpoint. They are also more difficult and tricky to set up than conventional ICE workshops and fuel stations.
- Cost of Switching from ICE to EV: As a customer, the replacement cost of switching from a conventional ICE vehicle to an EV is relatively high, and therefore, it becomes a hard pill to swallow for a big chunk of customers. Thus, customers are apprehensive about making a switch basis the sole reason of being eco-friendly, their rationale for buying EV dangles on the cost-to-profit ratio.
- Limited Raw Material Supply: Major components of an EV like lithium-ion (Li-ion) batteries are produced by lithium metal, sourced from hard rock or brine mines. Australia is the world’s biggest supplier of lithium, followed by Argentina, Chile, and China, which primarily produce it from salt lakes, aggravating the extraction cost.
EV manufacturers have curated some in-house strategies to get a firmer market hold and have received a set of favourable policies from the government. Many authorities across the globe, including the Government of India, have taken initiatives such as Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India (FAME); and India Scheme Phase II, along with many state-level initiatives to encourage both production as well as customer adoption of EVs by providing capital subsidy through and state-level initiatives.
Some popular in-house strategies are :
Different Brand Positioning – altering the value proposition from niche to a mass appeal. A holistic approach that gives a customer to resolve concerns that hinder the adoption of EVs.
Laying the network of charging infra – Making easy-to-use, plug-and-play-based charging units spread across a strategic geographical plain. This provides customers with a relatively seamless charging experience.
Enhanced Post Purchase Customer Experience – OEMs and dealers are planning to bank on post-purchase revenue opportunities that revolve around the product life cycle and are multiplied after each cycle.
For India specifically, the three “must-haves” for any go-to-market strategy for EV manufacturers are – breaking the charm of leading brands, raw material procurement strategy; and ramping up EV station networks across India using the GIG model. India is at a good growth tangent, and with a thoughtful, sustainable approach, it is poised to be the critical market share holder for EVs in the near future.
(Himanshu Kumar is the Co-Founder of MyMobiForce.)
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