By Kshiteej Mishra, Practice Leader, Mobility, Energy and Transportation at Praxis Global Alliance
The transition to sustainable and electric mobility is no longer a distant vision but a present reality. As the world grapples with the effects of climate change, the demand for eco-friendly transportation solutions has become increasingly urgent. India, the third-largest emitter of greenhouse gases, stands at the forefront of this shift, with electric mobility and green fuels taking center stage in the nation’s efforts to combat environmental challenges. The need to limit global warming is driving India to balance the energy demands of its growing population with the need for environmental sustainability. Today, transportation remains a key contributor to the country’s emissions, making the shift from fossil fuels to cleaner alternatives vital.
To substantiate this transition, electric vehicles (EVs) are the most visible catalyst of this change, the broader ecosystem that supports them plays an equally crucial role. Considering that the narrative around electric mobility is not just about EVs; it’s also about the entire ecosystem—from localized battery production to charging stations, government support to the development of green hydrogen infrastructure, the holistic approach reflects the country’s broader strategy to transition to cleaner, more resilient energy solutions.
As India, races toward its goal of carbon neutrality by 2070, the combined focus on electric mobility and green fuels is key to achieving energy self-reliance and environmental sustainability. India’s fast-tracking adoption of E20 by 2025, testifies Government’s critical role in reducing emissions, enhancing energy security, and creating new economic opportunities, particularly in rural areas, ensuring that the transition is both effective and sustainable.
Mobility and electric mobility ecosystem in India
India’s EV ecosystem is growing through the different partnership models between the private and the public. Several benefits such as the below are helping in creation of a large and multidimensional ecosystem
- Charging infrastructure is expanding with new stations being set up across cities
- Financial institutions now offer specialized EV loans
- Government, through agencies like NITI Aayog and the Ministry of Heavy Industries, continues to support EV adoption
The products segment in the mobility ecosystem comprises commercial vehicles, passenger vehicles, components, aftersales market, and charging equipment for EVs. Commercial vehicles include passenger buses and cargo vehicles, which are further classified into distinct categories: 3W passenger and cargo vehicles, light commercial vehicles (LCVs), and medium & heavy commercial vehicles (M&HCVs). The passenger vehicles segment includes 2W and 4W for both traditional ICE and EVs. Components and after-market segments include auto components, catering to both ICE and EVs sold directly to OEMs and in aftermarkets for service requirements. This includes critical EV components such as batteries, motors, and other relevant elements integral to the vehicle. Charging components and equipment include all the industrial-grade equipment used to set up charging stations.
The services ecosystem comprises logistics services, transportation services, and ecosystem solutions, including financing, insurance, leasing, software, battery charging, swapping stations, and aftersales service. Logistics includes the transportation of goods through various modalities, including road, rail, air, and water. Within this framework, electric mobility services are presently offered by railways, which handle logistics. However, there is a rapid adoption of electric mobility occurring, particularly in the 4Ws (especially in LCVs). Transportation, in a broader sense, includes diverse modes of passenger commute through 2W, 3W, and 4W cabs, inter and intra-city buses, and railway commutes. Promoting the adoption of electric mobility solutions in transportation, particularly for 2W, 3W, and 4W, can be facilitated by highlighting their economic advantages. Meanwhile, transitioning buses and railways to EVs can be driven by governmental initiatives aimed at promoting adoption in these sectors. Ecosystem solutions include an array of services such as financing, leasing, insurance, software, EV battery charging and swapping, and auto aftersales services, which enable the adoption of electric vehicles and their sustenance.
Mobility and electric mobility ecosystem opportunity
The Indian mobility ecosystem, valued at USD 651B in FY24, is projected to grow at 12 percent annually, reaching USD 1,257B by FY30. Passenger and commercial vehicles will grow at CAGRs of 13 percent and 14 percent, respectively. Electric mobility, currently at 5 percent penetration with a USD 34B opportunity, is expected to rise to 19 percent by FY30, driving the electric mobility market to USD 238B with a CAGR of 38 percent.
Electric mobility penetration
In FY24, electric mobility penetration in India was 5 percent, with higher penetration in segments like E3W (19 percent), E-Bus (13 percent), and rail logistics (66 percent) due to government initiatives. The total product opportunity in mobility was USD 200B, with electric products contributing USD 8B (~4 percent). The EV penetration of passenger vehicles i.e., E2W penetration stood at 8 percent, while E4W was 3 percent. The growth is supported by government policies, improved infrastructure, and cost savings of EVs over ICE vehicles.
Electric mobility ecosystem opportunity in India (FY30)
Electric mobility opportunity is projected to reach USD 238B by FY30. This opportunity would include ~USD 94B opportunity from products segment in FY30. The auto components market and the PV-CV market combined are expected to contribute nearly equally within the product segment while the electric mobility services opportunity in India is projected to reach ~USD 144B by FY30 with transportation, logistics, and ecosystem solutions contributing almost equally.
Challenges hindering EV adoption among commercial and passenger vehicles
Despite the promising outlook for electric mobility, key challenges persist. The high upfront costs of EVs create a financial barrier for potential buyers, while range anxiety among customers, driven by limited driving ranges and insufficient charging infrastructure, especially for larger vehicles, remains a significant concern. There are also fewer vehicle options and limited EV financing facilities. For manufacturers, reliance on imported components makes the production vulnerable to supply chain disruptions, driving up costs. Service providers struggle with issues like a lack of charger standardization and high setup costs. Regulatory support is crucial to overcome these hurdles and meet electrification targets by FY30.
Adoption of green fuelsand its benefits
On the biofuels front, climate change and India’s contribution to greenhouse gas emissions highlight the need for cleaner energy. Biofuels like ethanol, biodiesel, and biogas offer a sustainable alternative to fossil fuels, particularly in transportation. They help cut emissions, improve energy security, and reduce the country’s reliance on imported oil.
India is becoming a key player in the global biofuels market, holding a 3 percent share in terms of consumption, driven by government policies promoting ethanol and biodiesel. In November 2022, India achieved the E10 fuel target, reducing greenhouse gas emissions by 32 million metric tons over eight years, saving over INR 70,000 crores in import bills, and boosting farmers’ incomes by INR 17,000 crores. The government plans to transition to E20 by 2025 and B5 by 2030, further cutting emissions and creating economic benefits. These initiatives offer farmers new revenue streams and opportunities for entrepreneurs to invest in ethanol and biodiesel production.
Apart from this, India also aims to increase biogas production from 6.5 percent to 15 percent by 2030, potentially creating over 5,000 jobs and reducing emissions. Additionally, the country is starting to invest in hydrogen production for electric vehicles, with a need for clear plans and support to make fuel cell electric vehicles (FCEVs) viable.
Conclusion
The imperative to embrace electric mobility in India is indisputable. As one of the leading global contributors to GHG emissions, there is an urgent need for action to curb environmental impact and confront the escalating climate crisis. The transport sector, which accounts for a substantial portion of these emissions, underscores the pivotal necessity of transitioning to cleaner modes of transportation. As India’s population and urban centers continue to expand, the need for clean transportation options becomes increasingly urgent to mitigate air pollution, reduce carbon footprint, and cultivate healthier living environments. Crucially, the transition to electric mobility necessitates a collective effort from policymakers, industry stakeholders, and the public. Promoting the adoption of EVs, enhancing charging infrastructure and standardization, incentivizing clean energy technologies, and fostering public awareness campaigns are essential steps toward realizing a cleaner and more sustainable mobility landscape in India. Government initiatives aimed at promoting electric mobility reflect a commitment to this goal.
The transition to EVs demands commitment, innovation, and collaboration. Embracing electric mobility is not merely an option; it is an imperative for India’s future. So, we must embrace rather than brace for this change. India’s focus on EVs, biofuels, biogas, and green hydrogen strengthens its position in the global energy landscape and aligns with its goal of achieving net-zero emissions.