UNLOCKING THE POTENTIAL OF USED EVS IN INDIA'S GROWING EV MARKET

India's EV market, valued at USD 2 billion, is on the fast track to becoming the third largest globally by 2025. However, maintaining this momentum will depend heavily on developing a robust second-hand EV market

- Subhabrata Sengupta , Rajat Bansod , and Shubham Sanghavi

India lacks a well-developed second-hand market for EVs, primarily due to low buyer confidence and an underdeveloped supporting ecosystem. This gap could significantly hinder the sale of new EVs. The high upfront cost of EVs also remains a substantial barrier for many price-sensitive customers as they typically cost 30 per cent more than their ICE counterparts. Developing a strong used EV (UEV) market is crucial to bridging this gap, making EV ownership more accessible and affordable.

A weak UEV market will impact the resale value of EVs, a critical factor for Indian consumers. According to a YouGov survey, over 81 per cent of respondents consider resale value important. Low resale values can deter potential buyers beyond the early adopters, who are driven by environmental concerns or novelty. For the broader, price-sensitive market, strong resale values are essential for wider EV adoption. Moreover, lower resale values affect the Total Cost of Ownership (TCO) of EVs. A like-to-like comparison shows that the TCO of an EV can be up to ~40 per cent higher than an ICE vehicle if sold after five years.

India will be encountering UEVs for the first time since most EVs began hitting the roads only four to five years ago. Lessons from developed EV markets like China and the US are crucial. In China, a subsidy-driven boom led to a surge in EV sales but resulted in many abandoned cars due to low demand for UEVs. In the USA, the price of UEVs dropped by 33 per cent within a year, while ICE prices fell by only five per cent, according to iSeeCars. com. Globally, UEVs are taking longer to sell despite discounts compared to ICES, and they may end up in scrap yards due to a lack of resale, which can have a knock-on effect on new vehicle sales.