Will Electric Vehicles Turn The Auto Market Around?

While electric vehicles are gradually gaining acceptance among users, the industry has yet to show any profitability. This is because adjustments are inevitable in the marketplace, and each EV maker's ability to adapt to various changes is paramount. The article takes stock of how the EV sector fares as of now and what the future will unfold

- 

The cost of lithium-ion battery packs reached a historic low of USD 139 per kWh this year, marking a notable 14 per cent decrease from the levels seen in 2022. This substantial drop is attributed, in part, to heightened production capacity along various segments of the battery value chain. In contrast to the "unprecedented price increases" observed in the previous year, the decline in 2023 is also influenced by the reduction in prices for raw materials and components.

Furthermore, the growth in demand during this period did not fully meet certain industry expectations.

Despite adverse government measures, including the unforeseen reduction in FAME II (Faster Adoption and Manufacturing of Electric Vehicles II) subsidies, depletion of state subsidies, penalties for FAME non-compliance in the e2W sector, and the absence of a payment security mechanism for e-buses, the electric vehicle (EV) industry is witnessing a gradual increase in penetration by approximately 100 basis points (bps) across two-wheelers (2W), three-wheelers (3W), and passenger vehicles (PV).

However, the pace of this growth is slower than initially anticipated at the beginning of the year. With the ongoing decline in battery prices, electric vehicles (EVs) are poised to become more budget-friendly and accessible to Indian consumers. Supported by sustained government backing, increasing market demand, and the expansion of infrastructure, India has the potential to realise its ambitious goal of achieving 30 per cent EV penetration by the year 2030.

New Kid on the Block