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- EV penetration is set to reach 6-8% FY27 compared to a mere 1.3% in FY23 as per a CRISIL report.
- The total cost of acquisition (
TCA ) is lower for EVs but the total cost of ownership (TCO ) is higher as compared to other variants, says the report. - For e-cabs, the TCA is higher than that of TCO but charging infra and other factors play a crucial role in adoption.
In addition to Tata Motors’ EV versions of Nexon, Tigor and
For foreign brands like Tesla, policy roadblocks on imports, proved to be a limiting factor so far. However, the recent changes in the Indian policy landscape lower the import taxes if the companies commit to manufacturing in India in the subsequent years. Such policy incentives are likely to attract even more global EV brands to India.
But what do these new models of new-age tech cars mean to car buyers sitting on the fence? As per a recent analysis CRISIL, the total cost of ownership (TCO) or total cost of ownership of passenger vehicles could work in favour of EVs in the next three years for Indian buyers. So, how does the math work for prospective owners?
TCA is lower but the TCO may remain higher
TCO includes the purchase price of a particular asset, plus operating costs over the asset’s life span.
As of FY22, the TCO of EVs was 20-30% higher than that of all three variants which is petrol, diesel and CNG. “In FY27, we expect the economics to again remain the same. However, despite not-so-favourable cost economics, higher adoption has been witnessed initially environment-conscious buyers,” said CRISIL.
The latest analysis agrees with the earlier research from
The total cost of acquisition (TCA) on the other hand is lower for EVs as compared to other variants. TCA of an EV is 24% lower than that of a diesel variant, and 4% lower for a petrol variant. The TCA for an EV and a CNG variant is the same. This is due to lower registration charges for EVs amid high loan-to-value (LTV) ratios.
Overall, the report expects EV penetration in the passenger vehicle segment to reach 6-8% FY27 from a mere 1.3% in FY23.
Meter down: How do EVs fare as cabs?
Unlike in the PV segment, the cost dynamics are reversed for cab aggregators who want to drive in the EV lane – where even though the TCA is higher, TCO remains lower.
In FY22, the TCO of EVs for cab aggregators was lower than that of petrol and diesel vehicles around 29% and around 19%, respectively. However, the TCO of EVs is still higher than that of a CNG variant around 13% even for commercial use. This is due to the higher running of a commercial passenger vehicle and high fossil fuel prices.
The FAME-II subsidy provided the Government of India incentivises the adoption of EVs for commercial use, including 2-wheelers, 3-wheelers, and buses for public transport. However, the TCA of an EV for a cab aggregator is still around 17% higher than that of a diesel vehicle, 26% higher than a petrol vehicle, and around 16% higher than a CNG variant.
“In FY27, we expect the TCA of EVs to be lower than that of diesel and petrol variants, but higher than that of a CNG variant,” says CRISIL. The report expects the cab aggregator segment to lead the drive towards EVs, resulting in a 4% EV penetration FY26. The taxi segment accounts for 10-15% of sales within passenger cars.
However, a few challenges continue to linger, limiting the wider adoption of e-cabs on the road. A limited number of charging stations range anxiety and lack of large original equipment manufacturer (OEM) presence are hindering EV adoption. EVs used for personal use, however, are mostly charged at home, and charging infrastructure does not play a very high role there.
“The lower battery cost (due to expected localisation led the phased manufacturing programme or PMP) is expected to offset the lack of FAME subsidy and will help maintain the competitiveness of EVs against diesel and CNG variants for cab aggregators in the long run,” says CRISIL.