KPMG CII EV report 2020
KPMG and CII launched a report titled, “Shifting Gears: the evolving electric vehicle landscape in India.” This report offers a holistic view of how EVs are emerging as a disruptive force, with OEMs making investments in product development, players across the ecosystem testing and discovering new innovative business models and use cases. Since the running cost of EVs is much lower than ICE vehicles (one-tenth for 2W and 3W), a strong case emerges for a shift to EVs in B2B. Many large B2B players in e-commerce, grocery, food, courier delivery have been piloting EVs and some have moved into advanced stages of deployment. Battery swapping, Energy as a Service, etc. are being deployed to reduce upfront investment, improve vehicle uptime, eliminate range anxiety, etc. Thus, we see the entire EV ecosystem come together and make EV ownership with accelerated timelines a reality.
Rohan Rao, Partner – Industrials and Automotive, KPMG in India said, “ Electric Vehicles (EVs) are on course to fulfill their promise as a game-changer for the automobile industry. Two-wheeler (2W) and Three-wheeler (3W) auto segments are likely to lead the adoption curve followed by e-buses and passenger taxis. Directionally several factors, including the availability of charging infrastructure, robust financing ecosystem, reduced battery prices, and increased customer awareness, are paving the way for a new era of EV adoption. The government is also pushing the EV policy to address some of the adoption barriers. EV is, thus, emerging as a disruptive force, with several players experimenting with and discovering new innovative business models and use cases. Since the running cost of EVs is much lower than the Internal Combustion Engine (ICE) vehicles (one-tenth for 2W and 3W), a strong case emerges for a shift to EVs in the B2B segment. Ecosystem creation is the key. A widespread network of charging stations is vital for ensuring the fast adoption of EVs. Moreover, the local component ecosystem needs to be established. The government has launched a Phased Manufacturing Programme under FAME-II through which it is pushing the indigenization of parts. The government has also outlined plans to set up battery manufacturing plants in India Overall, there seems to be great promise in India’s EV story, as all the above factors come together to drive long-term growth.”
Jeffry Jacob, Partner, Management Consulting – Industrials and Automotive, KPMG in India said, “ EVs are undoubtedly the way forward for sustainable mobility and is increasingly gaining traction across the world. In India, the charge is being led by 2W and 3W segments, followed by public transport and non-public passenger fleet. One of the biggest hurdles India currently faces is our limited ecosystem for EVs. A significant number of critical components still continue to be largely imported and the charging infrastructure is largely inadequate. However, the industry and Government are proactively working to address these constraints and are taking steps in the right direction. Several leading states have released EV policies with a clear focus on driving increased adoption through both demand and supply led incentives. Subsidies are being linked to a higher level of localization to promote ‘Make in India’ and establish a strong EV ecosystem in India. India has already achieved global excellence in the automotive industry and is a major exporter of vehicles and critical components globally. With the right focus, collaborative approach by all stakeholders, and a pragmatic policy we can help drive clean mobility and be on the forefront in transitioning to a fossil-free future as well.”
Key gaps in the existing policy ecosystem and our recommendations:
The report also highlights the Total cost of ownership (TCO) analysis for different vehicle segments, few models that have been introduced in the Indian market to boost the adoption of EVs, and how the B2B segment is likely to lead growth in the next few years on account of established use cases, fixed/ pre-defined routes and cost savings due to higher utilization.
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