India’s EV transition: Challenges and opportunities in a hybrid landscape

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Synopsis India’s transition to electric vehicles (EVs) is a crucial step toward reducing emissions and dependency on fossil fuels. While the government has introduced several initiatives like the FAME scheme and state-level incentives to accelerate EV adoption, progress has been slow, particularly due to high initial costs, insufficient infrastructure, and the rise of hybrid vehicles. Hybrids offer a practical solution in the short term but are seen as a barrier to long-term sustainability goals. Key challenges include the need for expanded charging infrastructure, the development of domestic battery manufacturing, and addressing the environmental concerns surrounding battery production and disposal. Drawing lessons from global leaders like Norway and China, India can optimize policies, invest in renewable energy, and streamline regulatory processes to achieve mass EV adoption. Ultimately, a balanced approach that includes hybrids and EVs, with strong policy support and technological innovation, is essential for a sustainable future in India's automotive sector.

India stands at the threshold of a transformative shift in its transportation sector. With ambitious goals to reduce greenhouse gas emissions and dependency on fossil fuels, the Indian government has championed electric vehicles (EVs) as the cornerstone of its climate strategy. Yet, the road to electrification is fraught with challenges, including slow adoption rates, insufficient infrastructure, and the unexpected resurgence of hybrid vehicles.

This article delves into India’s evolving automotive landscape, exploring the interplay between EVs, hybrids, and policy frameworks that are shaping the future.

EV adoption: The current landscape

India’s vision to electrify 30% of its vehicles by 2030 reflects a bold commitment to sustainability, with initiatives like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) schemes complemented by state-level subsidies and incentives.

Despite these efforts, EV adoption has been slower than anticipated, with EVs accounting for less than 2% of passenger car sales as of 2024. The two- and three-wheeler segments dominate the market, led by companies like Ola Electric, Ather Energy, and Hero Electric, while urban centres such as Delhi, Mumbai, and Bengaluru are driving demand.

However, adoption in smaller cities remains sluggish, primarily due to limited infrastructure and high upfront costs. For instance, the Tata Nexon EV, a popular model, is significantly more expensive than its internal combustion engine (ICE) counterpart, making it less accessible to price-sensitive buyers. A recent survey reveals that 74% of Indian EV owners are committed to electric vehicles for life, citing reasons like environmental benefits, lower maintenance costs, and government incentives.

The hybrid alternative: Bridging the gap

Hybrid vehicles have emerged as a pragmatic alternative, effectively catering to the unique needs of Indian consumers. Companies like Toyota, Honda, and Maruti Suzuki have introduced hybrid models designed to strike a balance between fuel efficiency and affordability.

These vehicles offer immediate benefits by producing lower emissions and delivering improved mileage compared to traditional ICE vehicles. Their adaptability addresses a major barrier to EV adoption — range anxiety — by seamlessly operating on both fuel and battery power, ensuring reliability even in areas with limited charging infrastructure. Additionally, hybrids present a cost-efficient option for consumers who lack consistent access to charging facilities, making them a practical choice in the current transition to sustainable mobility.

Despite their advantages, hybrid vehicles face significant criticism that underscores their contentious role in India’s sustainable mobility landscape. From a regulatory perspective, the 48% GST imposed on hybrids — compared to just 5% on EVs — makes them financially less attractive to consumers, diminishing their market competitiveness.

Environmental concerns further complicate their adoption, as critics argue that hybrids, by retaining internal combustion engine components, slow the transition to fully zero-emission vehicles and undermine long-term sustainability goals. This dual narrative highlights the tension between the short-term pragmatism of hybrids as an interim solution and the pressing need for long-term environmental imperatives.

Infrastructure: A critical bottleneck

India’s EV revolution is critically dependent on the development of reliable charging infrastructure, which remains a major barrier to widespread adoption, particularly in rural and semi-urban areas. According to the Indian Energy Storage Alliance (IESA), the country needs an investment of $30 billion by 2030 to establish a sufficient charging network.

Currently, public charging stations are predominantly concentrated in metropolitan areas, leaving smaller cities and towns underserved, which limits accessibility and slows the adoption of electric vehicles outside urban centres.

Key challenges to India's EV charging infrastructure include the slow rollout of charging stations, which is insufficient to meet the growing demand for EVs. Additionally, India’s power grid, which is still heavily reliant on coal, faces the risk of further strain as the number of EVs increases.

Another significant hurdle is the lack of standardization in charging ports and the incompatibility between different EV models, which complicates infrastructure development. Innovative solutions like battery swapping and portable charging units are gaining traction, but their widespread adoption will require significant alignment and collaboration between policymakers and industry stakeholders to address these issues effectively.

Battery technology and resource dependency

The heart of any EV is its battery, and India's dependence on imported lithium-ion cells presents both economic and geopolitical risks. The mining of lithium and cobalt, crucial for battery production, raises serious ethical and environmental concerns, further compounded by the dominance of Chinese manufacturers in the global battery market, which highlights India's vulnerability.

To reduce this reliance, emerging alternatives such as aluminium-air batteries, which promise lower costs and higher efficiency, are being explored by Indian startups like Log9 Materials.

Additionally, solid-state batteries, which offer improved safety and energy density, are considered the next frontier in EV technology. For India’s EV ecosystem to thrive, developing domestic battery manufacturing capabilities is essential, as it would not only reduce dependence on imports but also foster local innovation.

The environmental imperative

Transportation contributes over 13% of India’s greenhouse gas emissions, making EVs a crucial part of the nation’s climate action strategy. However, the environmental benefits of EVs must be weighed against the ecological costs of battery production and disposal. Mining lithium and cobalt, essential for EV batteries, leads to habitat destruction and water pollution, while the end-of-life management of batteries remains a challenge.

India currently lacks a comprehensive framework for recycling EV batteries, posing potential environmental hazards. Learning from global models, such as Europe’s battery passport initiative, India can implement measures to track and recycle batteries responsibly, ensuring a transition to a circular economy that mitigates these impacts.

Consumer perception and market challenges

The Indian consumer remains cautious about EVs, primarily due to high initial costs. Despite government subsidies, models like the Hyundai Kona or MG ZS EV are still beyond the reach of the average buyer. Range anxiety, or the fear of running out of charge without access to a charging point, also deters many potential customers.

Additionally, the uncertain resale value of EVs, especially concerning battery health and long-term depreciation, adds to consumer hesitation. To address these challenges, awareness campaigns and transparent communication about the total cost of ownership, which often makes EVs more cost-effective in the long run, are crucial in changing public perception.

Policy and regulation: Achievements and gaps

The Indian government has launched several initiatives to boost EV adoption, such as the FAME II scheme, which has allocated over ₹10,000 crores to support EV sales, especially in the two-wheeler segment. States like Gujarat and Delhi are further promoting adoption by offering additional incentives, including free registration and road tax exemptions.

However, the implementation of these policies has faced challenges, with delays in subsidy disbursements, allegations of fraud, and bureaucratic hurdles undermining their effectiveness. These issues have diminished public trust in government initiatives, emphasizing the need for a more efficient and transparent approach to sustain momentum in India’s EV transition.

Future priorities

To address the challenges facing the EV sector in India, several key measures need to be taken. First, streamlining subsidy mechanisms to ensure timely payments is crucial for maintaining consumer trust and sustaining growth in the EV market.

Second, expanding the scope of incentives to include hybrids and innovative technologies will help cater to a broader range of consumer needs and drive further adoption. Finally, introducing stringent regulations for battery recycling and disposal is essential to mitigate the environmental impact of EVs and ensure a more sustainable future for the sector.

Global comparisons: Lessons for India

India’s EV journey can benefit from the experiences of countries like Norway and China. Norway, a leader in EV adoption, has seen over 80% of new cars sold being electric, thanks to a comprehensive set of incentives such as tax exemptions and free public charging.

Meanwhile, China, the world’s largest EV market, enjoys the advantages of strong government support, a vast and growing charging network, and robust domestic battery production capabilities. To succeed, India must adapt aspects of these models to its unique socio-economic context, ensuring that affordability, infrastructure, and environmental concerns are balanced effectively.

Hybrid vs. EVs: A balanced perspective

The debate between hybrids and EVs reflects broader questions about India’s approach to sustainability. While hybrids offer a practical solution for the present, their role in the long-term transition to zero-emission vehicles is limited. EVs represent the future, but achieving mass adoption requires overcoming significant barriers.

Policy recommendations: India should consider gradually phasing out incentives for hybrids as the EV infrastructure improves, shifting focus to fully electric options. Simultaneously, efforts to build a localized EV supply chain would be crucial in reducing costs and making EVs more affordable.

Additionally, promoting renewable energy integration into the grid is essential to ensure that EV adoption contributes effectively to decarbonization goals, helping to reduce the overall carbon footprint of transportation. By addressing these key areas, India can strengthen its EV ecosystem while supporting sustainable development in the long term.

Emerging trends and future outlook: India’s EV market is set for substantial growth, with key segments driving this shift. Electric two-wheelers, due to their affordability and practicality, are expected to dominate the market in the near future, offering an accessible option for urban and rural consumers alike. Additionally, commercial EVs are gaining traction, particularly among logistics companies looking to reduce operating costs and emissions.

Technological innovations, including advancements in autonomous driving and vehicle-to-grid technology, could further transform the sector, enhancing efficiency and sustainability.

While challenges remain, such as infrastructure and consumer awareness, India’s EV revolution appears inevitable. With coordinated efforts from the government, industry, and consumers, the country has the potential to set a global benchmark for sustainable transportation.

India’s EV transition: A complex journey

India’s transition to electric vehicles is a complex journey marked by competing priorities, technological hurdles, and socio-economic challenges. While hybrid vehicles provide an interim solution, the long-term focus must remain on achieving a fully electrified transportation system. By addressing infrastructure gaps, fostering innovation, and aligning policies, India can lead the way toward a greener, cleaner future.

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