Business

‘Pandemic to delay EV expansion’

The COVID-19 pandemic would delay the expansion of electric vehicles (EVs) in the Indian auto industry, according to India Ratings and Research (Ind-Ra).

Low affordability and the government’s priorities in reviving the otherwise suffering auto industry could shift the focus away from EVs in the interim, it said.

“Passenger vehicles (PVs) would face a double whammy as consumers would be wary of buying a costlier EV than an internal combustion engine (ICE) vehicle while original equipment manufacturers (OEMs) would refrain from incurring high capex,” the ratings agency said in a report.

Stating that the growth in buses may take a back seat as orders for city buses are largely from State transport undertakings, and as State governments were already grappling with falling GDPs, it said two wheelers, especially scooters, could see an upside due to the lower pricing gap between an EV and ICE and several models available to consumers.

“Though the EV penetration is likely to be faster in scooters, buses and three wheelers in the medium term (defined as three to five years), PVs may take longer.”

Ind-Ra said the underlying challenges in the adoption of EVs such as higher battery cost and reliance on imports would prevail in the medium term, and robust government policies would remain key for the development of EVs in the country.

It said reduced affordability and lower economic activities due to the pandemic could result in the automobile industry recording a decline in sales of over 20% yoy for the second consecutive year in FY21.

“This is likely to impact the sales of EVs which are costlier than an ICE vehicle. Two wheelers 2Ws have benefited from rural demand and shift to personal mobility, and the segment could be the least impacted with regard to electrification due to better pricing and model choices,” it said.

However, three-wheelers and buses, which have seen higher electrification in 2019, are among the most affected segments in FY21 and hence, could see a delay in electrification, it added.

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Printable version | Dec 2, 2020 12:21:00 PM | https://www.thehindu.com/business/pandemic-to-delay-ev-expansion/article32932741.ece

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