An Unaffordable Car Ride

Expensive models and stagnation in middle-class wages have stalled personal electric vehicles from whizzing down Indian roads. Is it time for a course correction?

- By Rakshit Kumar

When it came to letting go of his eight-year-old diesel variant of Maruti Suzuki's Brezza, Swadesh Singh thought of buying an electric car. It would not only save on fuel costs but also take care of the ever-changing regulatory norms for internal combustion engine (ICE) vehicles in the country. Delhi's air-pollution combating scheme, Graded Response Action Plan, is especially annoying.

And anyway, his BS IV model had only two years left to ply on the roads of the national capital. With the government schemes incentivising electric vehicles (EVs) and the industry launching more EV models, Singh was optimistic that electric cars would get a bit cheaper in the next couple of years. However, that did not happen.

Empty Pockets

“The upfront cost is higher than other cars; plus batteries, which are very important in EVs, are not covered in standard car insurance. You have to add a top up. On top of it, many of my friends have complained of poor service visa-vis EVs,” says Singh, a professor in one of Delhi University’s colleges.

For people like Singh, the biggest deterrent in shifting from ICE to EVs is the cost factor, which is compounded by the stagnation in middle-class incomes.

According to Marcellus Investment Managers, the average annual income for this group has grown at a mere 0.4% compound annual growth rate over the past decade, from ₹10.2 lakh to ₹10.7 lakh, while car prices have risen 7.6% annually between 2019 and 2024, according to Jato Dynamics, an automotive business-intelligence firm. Inflation, averaging 5% annually, has further squeezed purchasing power.

“Inflation may have gone down for the past few quarters but real wage growth has been flattish,” says Rajani Sinha, chief economist at credit-rating agency CareEdge Group.