Suman Mishra, MD & CEO of Mahindra Last Mile Mobility Ltd., shared her views with the Society of Indian Automobile Manufacturers (SIAM) on the transformative impact of government policies, market acceptance, and industry innovation. She highlighted the essential steps needed to scale up and sustain India’s electrification journey in the automotive sector. Following are the key insights.

India has become the pioneer in formulating the policy environment that would facilitate the electrification of the automobile industry and the last-mile transportation vehicles, particularly two- and three-wheelers. The government interventions have been quite effective in establishing a completely enabling environment for the EVs and the local manufacturing industry.

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme was one such program that led this change and was a demand-side incentive program that helped in reducing the cost pressure on the customers. Understanding the fact that the initial cost of EVs is relatively higher than that of conventional vehicles, the government extended these incentives by including the waivers on road taxes as well as registration fees.

Further, the Production Linked Incentive (PLI) schemes have been instrumental in boosting the domestic value addition. The PLI for Auto and Auto Components focused on the local manufacturing of EV parts and the PLI for Advanced Chemistry Cell (ACC) aimed at the domestic manufacturing of batteries which has been a constraint in the EV value chain. India has progressed in many areas of EV manufacturing but battery cell production has been comparatively slow, which makes the PLI ACC scheme critical for future domestic dependence.

Furthermore, the support of the government in the establishment of the charging infrastructure ecosystem has been essential. Through encouraging the players to create a network of charging stations, the government is thus supporting the easier transition to the use of EVs. These policies have not only supported electrification initiatives but also gained a large market interest.   

Market Acceptance and Consumer Sentiment

From the consumer side, EVs particularly electric two and three-wheelers have been welcomed mainly because they provide better ride quality. Electric vehicles are more comfortable to ride, handle and easier to manoeuvre than traditional vehicles, thus, can be used by women, the elderly, and even the disabled. ICE vehicles have always been a challenge to these groups due to certain hurdles but EVs have eliminated them as they are easy to operate.

The issue of higher initial costs is still there, but from the TCO point of view, consumers have a lot to gain from electrification. Less fuel consumption and fewer repairs to be made mean that EVs are cheaper to run in the long run. This value proposition along with enhanced driving experiences has made the EVs more attractive to the Indian consumers.

Industry's Role in Sustaining Growth

Although the government and the market have created a good platform for EVs, it is also up to the industry to respond. The automotive original equipment manufacturers (OEMs) require to increase production volumes in order to reduce the overall cost of electric vehicles. This is even more the case where electrification has only got to approximately 10% for the L5 category of three-wheelers, which is still far from the 30% penetration necessary to create a visible shift.

Another area that OEMs should address is the product design and fit-for-purpose vehicles. Since batteries are the most costly component of EVs, it is advisable for car makers to offer the range and features that customers require. For example, a customer using a vehicle for 100 kilometers daily does not need a battery that can support 200 kilometers of range since it will only be costly. Additional to the already mentioned elements, further customer satisfaction can be achieved by offering features such as connectivity of applications, increased comfort for the driver, and better interfaces while keeping functional requirements more moderate.

Thirdly, OEMs have to go international. The three-wheeler market is one of the biggest export markets in India and there is a big opportunity for the export of Indian made EVs. Thus, by emphasis on scale and export, Indian manufacturers can seek efficiency and make their products competitive in the global market.

Policy Consistency and Financial Support

Going forward, consistent policy frameworks from the government will be critical. A five-year policy roadmap for EVs would provide clarity to both manufacturers and customers, allowing them to plan with confidence. Continuation of demand-side incentives is essential, especially since these subsidies directly benefit consumers by reducing the upfront cost burden.

Furthermore, access to affordable financing through Priority Sector Lending for EV buyers, particularly for income-generating vehicles like three-wheelers, is another area where the government can provide support. By offering better interest rates or higher loan-to-value ratios, the government can ease the financial barriers that prevent small entrepreneurs from adopting EVs.

Battery Manufacturing and Supply Chain Localization

This is one of the biggest hurdles that India has to overcome in its mission to electrify the nation’s transportation sector. India has been successful in localizing most parts of the EVs but battery cell manufacturing is still missing. For India to become a global EV manufacturer it needs to develop its cell manufacturing capacity. The PLI ACC scheme is a step in this direction, wherein the government is promoting companies to establish battery cell manufacturing plants in the country.

While India is far behind countries such as China, which controls the battery market, including battery production, the processes are underway to compensate for the deficit. The goal set for 2030 is to have a strong battery manufacturing industry in the country that is capable of catering to domestic needs and possibly export as well.

Resilient Supply Chain and Recycling

A localized and reliable supply chain is critical to the growth of the Indian EV industry in the long term. As of now, most of the larger Indian manufacturers have localized their production to a large extent except for semiconductors and battery cells. Local sourcing of such components as battery cells will help to eliminate dependency on imports which is always a threat to the industry.

Another major factor that is considered essential to the future of mobility is recycling, especially for EV batteries. The EPR regulations make sure that OEMs have the liability of managing the end of life of their products, battery recycling included. Even though the recycling system of EV batteries is not fully developed, there are developments being made. There are increasing relationships between OEMs and recycling companies, and that with the expansion of the EV market, so will the economics of battery recycling. This will help to reverse the trends and make the EVs environmentally friendly and promote circular economy.

Scaling, Exporting, and Leading the Revolution

India has the potential to become the world’s largest manufacturer of electric two and three-wheelers. The industry together with the backing of progressive government policies is well placed to exploit this emerging market. However, more efforts are needed from all the players including the government, the OEMs and the consumers. It also includes focus on production capacity, efficient battery production, and favorable policies; India has the potential to not only become a regional electric vehicle manufacturing center but also become a global player.

There is definitely a prosperous future for electrification in India’s automotive industry, with the prospect of even more improvements in the future. As the development of the industry progresses, the emphasis should be placed on increasing its competitiveness on the global market.