EV Costs on the Brink to Shrink

Buy EVs the way you buy Mobile phones

As nations around the globe are joining forces to reduce the impact of climate change, Electric Vehicles provide an effective solution for curbing global warming. But similar to other technologies, E-Mobility also has its share of challenges. The high cost of the Electric Vehicles is one of them. Multiple times the numbers of cutting tail pipe emissions couldn’t be reached because people didn’t step up to buy such high cost vehicles.

The main reason behind the high cost is the EV battery, which is almost around 40% of the cost. The reason is its Lithium-ion make and import from other nations.

As we deep dive into the costing logistics, we see that the market share of electric vehicles in India is now just 0.06%. Mahindra & Mahindra Ltd.’s launch of its e-KUV at a price of ₹825,000 ($11, 587), compared to its next cleanest option — a mid-range petrol variant at ₹650,000 — highlights the challenge of pricing electric cars that can entice buyers. A global model such as Hyundai Motor India Ltd.’s Kona electric SUV starts at ₹25 lakh and has sold just about 300 units in seven months since its launch. And same goes for the Tata Tigor EV which ranges from Rs 13.09 lakh (ex-showroom, Delhi) to Rs 12.59 lakh.

The rapidly evolving technology, which promises to bring the cost of vehicles down, is also keeping potential buyers on the fringe. They would rather wait for the prices to stoop down to their level.

“Pricing EVs at below ₹10 lakh is going to be very difficult,”

Pawan Kumar Goenka, Managing Director at Mahindra & Mahindra.

With our government, pushing for a faster adoption of electric vehicles, NHEV proposes AHEM (Annuity Hybrid E-mobility) plan to provide any Transport Corporation, Public Transport or Private Fleet Transporter with a CAR / BUS / LMV / HMV on 40% Lesser Cost than retail price on battery subscription model. In this scenario, the cost of two EV cars would be: Hyundai Kona – 14.1 lakh, Tata Tigor EV- 7.9 lakh. This would ensure the fleet operators to buy the car at the same price of an IC vehicle.

So, for a petrol or diesel compact sports utility vehicle in India that currently costs ₹8-9 lakh, its electric variant, if priced at a ₹10-lakh price band, would appear to strike the consumers’ pulse effectively.

Rajiv Singh, partner, Deloitte Touche Tohmatsu India LLP

Thus, with automobile makers planning to invest up to $300 billion on electric vehicle and lithium -ion price down by more than 70%, electric vehicle manufacturers will soon be matching consumers’ expectations and exhilarating towards greener tomorrow.

“India is home to 1.35 Billion people using 800 million mobiles and driving 30.92 million vehicles, we never gave subsidies or organised camps to distribute free mobiles, ASSAR’s impetus of Ease of Doing business in E-mobility is to fit it into user’s pocket and make the buying and financing process smooth for scalability. The way telecom companies gave away expensive mobile phones on minimal down payments, reduced upfront retail cost of smartphones and kept billing them till recovered it along with selling their subscription services” 

Abhijeet Sinha, Director- National Highway for Electric Vehicles & EoDB

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