Mobility Energy and Transportation
E4W market potential and projections
30 May 2024

The Indian electric vehicle (EV) opportunity is experiencing a remarkable surge, reaching approximately US$ 35B in FY24 with 35% year-on-year growth. It is projected to reach around US$ 235B by FY30, growing annually at about 37% from FY24 to FY30, reflecting a paradigm shift towards sustainable mobility. In line with this transformative trend, this newsletter will focus on electric four-wheeler passenger vehicles, which are anticipated to command a substantial 16% share of four-wheeler sales by FY30. This momentum is primarily fueled by government subsidies provided to consumers at the time of purchase and the cost-effectiveness of electric four-wheelers (e4Ws), which boast a 6-14% lower Total Cost of Ownership (TCO) compared to traditional Internal Combustion Engine (ICE) counterparts. Additionally, there is a diverse range of new e4W models hitting the market, catering to budget-conscious consumers. Moreover, we will also discuss the challenges that lie ahead on this road to growth and how they can be addressed.

E4W overview

In FY24, the e-4W passenger vehicle opportunity stood at ~US$ 2B, growing at ~46% year-on-year. It is expected to reach ~US$ 18B in FY30, growing annually at about 47% from FY24 to FY30, as shown in Exhibit 1. Despite the remarkable growth in sales volume, the penetration of e4Ws is still in its early stages, currently at 2.2%. However, this trajectory is expected to accelerate, with penetration forecasted to reach 16% and ~880K units sold annually by FY30.

The e4W category, with a sales volume of ~80K in FY24, has a presence of multiple vehicle variants. The variants are mainly classified into three categories based on their use cases: hatchbacks for daily commuting, sedans for long-distance travel, and utility vehicles for carrying more luggage.

The utility vehicle segment is the most well-served, with OEMs such as Tata Motors, BMW, Audi, Jaguar, Land Rover, Mercedes, and Hyundai Mahindra offering around 18 different models to customers. Sedans are the next best-represented 4W segment with 15 models in the market. However, the hatchback category is notably underserved. This indicates that while certain segments have made headway into the EV market, providing consumers with diverse choices, there are still some vehicle segments catering to specific sets of customers that have not attracted the attention of EV OEMs.

These variants combined offer ~30+ different vehicles at multiple price points, providing consumers with a wide array of options as shown in Exhibit 2.

Total Cost of Ownership analysis

While electric cars require high initial investments, the overall ownership costs throughout the vehicle's lifecycle are more economical than those of traditional vehicles. The higher upfront capital costs associated with e4Ws are effectively balanced by substantial fuel savings compared to their ICE counterparts. For electric cars, total ownership costs decline by 14% with subsidies, and even without subsidies, there is a 6% reduction in ownership costs over the vehicle's life, as shown in Exhibit 3.

Bill Of Material (BOM) breakdown: E4Ws have multiple unique components relative to their ICE counterparts, such as battery pack, charger, inverter, electric motor, and cooling unit accounting for 60-65% of the vehicle manufacturing costs. The rest of the manufacturing costs will be spent on the components which are common to ICE vehicles. The following exhibit describes the cost breakdown across segments for EVs versus ICE vehicles.
Expansion Opportunities

Major players in India's passenger four-wheeler market are actively planning to expand their presence in the EV sector. Tata Motors is set to launch 10 different EV models, investing ~US$ 1.8B over the next 4-5 years, and aiming to raise an additional US$ 1B to finance its EV growth. Leading OEM Maruti Suzuki plans to enter the EV market, introducing its first EV by the end of FY25, followed by six more variants by 2030, with around ~US$ 400M allocated for setting up EV manufacturing facilities. Mahindra Electric has set an ambitious target of achieving 20% of their utility vehicle sales through EVs by 2027, launching five new EV models and making significant investments in manufacturing. Hyundai and MG Motors, who have successfully launched EV models in India, are further focusing on EVs to expand their sales footprint.
Opportunities and challenges for e4W adoption in India

Despite the emergence of numerous new players and established incumbents entering the Indian EV segment, challenges persist that hinder widespread adoption. Key obstacles include the substantial upfront costs, range anxiety due to limited range, limited availability of options compared to traditional ICE vehicles, and the underdeveloped charging infrastructure.

Addressing these challenges will be critical in shaping the adoption landscape of e4Ws in India, paving the way for their increased acceptance and integration into mainstream transportation.

We at Praxis Global Alliance, have built a strong IP across a clean mobility ecosystem ranging across different vehicle segments and services, and players across the ecosystem stand a chance to leverage our strong capabilities to build on their current offerings or venture into new business opportunities and stay ahead of the new & upcoming competition.

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