Our BlogHow Public-Private Sector Collaboration Can Accelerate EV Adoption in India

How Public-Private Sector Collaboration Can Accelerate EV Adoption in India

Raghav Bharadwaj

Raghav Bharadwaj

Head of Strategy and Leadership

September 06, 2023
A graphic showing the partnership between private and public sectors

Recently, India has been experiencing a noticeable shift towards electric mobility. Electric vehicles (EVs) are increasingly recognized as a potential solution to urgent environmental issues and as a means for upward mobility. Despite this, challenges, including the lack of charging infrastructure and the high EV costs, continue to deter wider adoption. Overcoming these obstacles will require a concentrated, unified effort from all stakeholders, with an emphasis on the combined efforts of the public and private sectors.

This article delves into the transformative impact of public-private collaboration in the field of EVs. Specifically, it answers the following questions:

  1. What role does public and private sector collaboration play in accelerating India's transition to electric mobility?
  2. How can this collaboration address the challenges of transitioning to EVs?
  3. Why is public and private sector collaboration crucial for this transition?

The Current State of EVs in India

In the first half of 2023, 7,21,971 EVs were purchased. This represents almost 73% of the total EV sales in 2022. The primary contributors to this number were two- and three-wheelers, with 4,34,914 and 2,46,270 units sold, respectively, while private vehicles accounted for 38,359 units.

A pie chart showing EV sales for two-wheel, three-wheel, and EV cars during the first half of 2023

Much of this growth is attributed to government initiatives and policies. The FAME initiative by the Indian government provided upfront capital subsidies for EV owners and fleet operators and reduced GST from 12% to 5% and income tax deductions on the interest paid on loans. Several state governments have offered financial and non-financial incentives to boost EV adoption.

Moreover, prominent automobile manufacturers and numerous EV startups are investing heavily in the creation of EVs tailored to Indian road conditions and improving the driving experience. Simultaneously, charging infrastructure providers, EV software developers, and investors are collaborating to create better charging facilities. Above all, the private sector is working closely with government agencies to tackle key challenges and accelerate EV growth and adoption.

The Importance of Public and Private Sector Collaboration

The symbiotic relationship between the public and private sectors is crucial in maintaining the growth of EV adoption. This collaboration is a mix of expertise and the right resources. The private sector, composed of leading EV manufacturers, technology developers, and market leaders, offers out-of-the-box thinking and innovative solutions.

Their collective capabilities in designing and producing EVs catered to Indian customers play a vital role in promoting EV adoption. Additionally, their robust distribution and marketing networks help debug myths about EVs and make them more acceptable to the wider public.

In contrast, the public sector, with its significant influence via subsidies and incentives, is a crucial ally for the success of the private sector. Policymakers and various government departments create the regulatory framework and policies that incentivize EV adoption. Financial incentives like subsidies, low-interest loans, and tax benefits create a conducive environment for the private sector. Simultaneously, these policies stimulate consumer interest and adoption.

Collaboration between the two sectors results in shared expertise, resources, and risks. The pooling of knowledge and resources leads to accelerated innovation, and risk-sharing mechanisms facilitate bold, forward-looking initiatives. Further, the shared commitment towards environmental and economic goals can strengthen the bond, resolving many challenges that hurdle EV transition.

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Challenges to EV Transition

Despite considerable progress in India's EV journey, many challenges continue to hamper widespread adoption. Notably, the lack of infrastructure, the cost disparity between EVs and conventional vehicles, and consumer awareness and perception continue to pose challenges facing this industry. A siloed approach, where public and private sectors operate independently, exacerbates these challenges and undermines the efforts required to address them.

Charging Infrastructure Roadblocks

The current charging infrastructure in India is insufficient, with an average of one station for every 135 vehicles. In comparison, the global average is one station for every 20 vehicles. Moreover, these charging stations are primarily located in the metropolitan areas of Delhi, Mumbai, and Bengaluru, creating range anxiety for drivers traveling long distances.

An infographic comparing India with the global average of vehicles per charging station

A public-private partnership (PPP) could accelerate the expansion of charging infrastructure in India, alleviate range anxiety, encourage long-distance travel, and open new possibilities for EV adoption.

Affordability Concerns

In India’s price-conscious and value-driven car market, EVs come at a significantly higher cost than traditional internal combustion engine (ICE) vehicles. These factors contribute to low adoption rates in the four-wheel segment.

Given that batteries account for 40% of the manufacturing costs, a PPP can foster innovation to improve battery energy efficiency, thereby reducing production costs. Such collaborations can make EVs accessible and appealing to Indian EV buyers.

Consumer Awareness and Perception

EVs are a relatively novel concept, and there's a lack of adequate awareness and knowledge about their use. This has led to misconceptions and myths, which can discourage EV purchases.

Public and private sectors can design effective educational initiatives that dispel myths and inspire confidence in EVs. These measures can empower consumers with knowledge, dispel misconceptions, and foster enthusiasm for EVs, making them a preferred choice when it comes to vehicle buying decisions.

Lack of Adequate Technological Tools

The push for EV adoption requires interoperable technological components. India’s diverse market, with its unique demands, underscores the need for software solutions that seamlessly integrate various EV systems. Fortunately, Indian startups are at the forefront, innovating to bridge these disparities. Their efforts are pivotal in reshaping public perceptions and making EVs more user-friendly.

Strategies and Solutions for Collaborative EV Transition

Considering the challenges mentioned above, the public and private sectors can jointly take some specific steps to ensure greater EV adoption.

Investments in Charging Infrastructure

The high costs of establishing EV charging infrastructure are a significant entry barrier, resulting in high range anxiety. Some measures to address them are:

  1. Joint investments from the public and private sectors in building charging stations can distribute the cost burden and risks.
  2. Partnerships between utility companies and charging infrastructure providers can ensure smart grid integration.
  3. Introduction of attractive financing options such as low-interest loans, tax subsidies, and more.
  4. Creation of joint consortiums to pool expertise and reduce maintenance costs.

Policy and Regulatory Framework

A collaborative policy and regulatory framework is the cornerstone for EV adoption as it establishes a stable and resilient environment that benefits all stakeholders. Some specific actions in this regard are:

  1. Creation of comprehensive policies that address the concerns of all stakeholders.
  2. Regular public-private interactions can streamline the permitting and approval processes, which can expedite action.
  3. Building a comprehensive renewable energy policy for EVs to ensure long-term sustainability and greater environmental benefits.
  4. Development of standards and certifications for EVs and charging infrastructure.

Research and Development Collaborations

Public and private sectors can undertake various research and development initiatives that can lower the manufacturing costs of EVs, improve battery technology, and create a sustainable EV ecosystem. Some possible actions are:

  1. Joint research projects between academic institutions, industry players, and government research agencies to accelerate EV technology development.
  2. Combined innovation programs to develop advanced battery technologies, electric drivetrains, and lightweight materials for EVs.
  3. Cooperative initiatives for advancing indigenous EV technologies, decreasing dependence on imports and foreign supply chains.
  4. Public-private partnerships are designed for pre-competitive research, enabling the sharing of resources and knowledge to overcome technological barriers.

Skill Development Programs

India's EV industry is projected to generate one crore direct jobs and about five crore indirect jobs by 2030. However, the gap in skills could prevent India's young workforce from capitalizing on this opportunity. The public and private sectors can reduce this gap with the following actions:

  1. Governments and the private sector should jointly develop EV-specific training programs and curriculum.
  2. Investment in upskilling the existing workforce in the EV industry.
  3. Build credible education technology (edutech) platforms offering online training and certification.
  4. Collaborate with educational institutions to provide apprenticeship programs.

It is encouraging to note that such collaborations have already begun, contributing to India’s rapid EV adoption.

An infographic listing various actions to take for collaborative EV transition

Successful Case Studies of Public and Private Sector Collaboration

Various stakeholders in India’s EV industry are working together, and the current rapid adoption is a testament to these joint efforts. Below are three successful collaborations.

Ather Energy and Karnataka Government's EV Policy

Ather Energy, a prominent Indian electric scooter manufacturer, has partnered with the Karnataka Government to set up 1,000 fast-charging points across the state. These stations will be established in public areas owned by the government or its subsidiaries, with state-owned power distribution company BESCOM providing support and implementation as per the Memorandum of Understanding (MoU). This partnership is designed to alleviate range anxiety and encourage EV adoption in Karnataka.

Hyundai and Indian Institute of Technology (IIT) Collaboration on EV Technology

Renowned car manufacturer Hyundai entered a significant collaboration with the Indian Institute of Technology (IIT) Delhi to advance EV technology. The joint venture includes research and development projects aimed at improving EV technology, battery efficiency, and range capabilities. Hyundai has donated its Kona EV for battery profiling using external sensors and OBD connectors, which help understand EV performance under varying driving conditions.

MG Motor and Tata Power’s Partnership for Fast Charging Network

MG Motor and Tata Power combined efforts to establish an extensive fast-charging network across India’s major cities. With MG Motor's commitment to environmentally friendly vehicles and Tata Power's expertise in supplying charging infrastructure, this partnership addresses range anxiety and instills confidence in EV owners for long-distance travel.

These partnerships demonstrate the potential for society to leverage the environmental and economic benefits of EVs.

The Sustainable Impact of Collaboration on EV Transition

The collaboration between the public and private sectors has a far-reaching and varied impact. It can accelerate EV adoption and reduce carbon emissions, improving air quality. Additionally, such partnerships can encourage the use of renewable energy, promoting a cleaner and more sustainable transportation ecosystem.

Beyond the environmental benefits, collaborative efforts in the EV industry also create substantial economic opportunities. The growth of the EV industry boosts job creation across various sectors, including manufacturing, research, development, and maintenance of EVs and charging infrastructure. As India emerges as a global leader in electric mobility through joint initiatives, it attracts investments from domestic and international entities. This investment influx fosters innovation and technological advancements, furthering India's expertise in EVs and related technologies.

Additionally, a robust EV ecosystem enables India to export its indigenous EV technologies, marking its position as a key player in the global electric mobility market. Therefore, the sustainable impact of collaboration on India's EV transition is beneficial for the environment and drives economic growth, energy security, and global recognition.

A list of benefits attributed to sustainable and collaborative EV transition

Driving EV Transition Through Collaboration

Collaboration between the public and private sectors is critical for accelerating India's EV transition. Successful partnerships, like those between Ather Energy and the Karnataka Government, Hyundai and IIT Delhi, and MG Motor and Tata Power, have proven a significant impact in overcoming challenges and driving sustainable growth in the EV industry.

To fully capitalize on the potential of electric mobility, more collaborations are urgently needed. Various stakeholders can form strategic partnerships to effectively address key roadblocks such as charging infrastructure expansion, affordability concerns, consumer awareness, and technological advancements. Through united efforts, the public and private sectors can establish an enabling environment that supports widespread EV adoption and paves the way for a cleaner, greener future.

All stakeholders must collaborate to bring about a transformative transition. Together, through cooperation, India can steer towards a sustainable future, reduce carbon emissions, improve air quality, and embrace electric mobility as a cornerstone of a cleaner, more responsible transportation landscape.

To learn more about the role of PPP in India's EV transition, please see the FAQ and Resources below!

FAQ

What is the current status of electric vehicle adoption in India?

EV adoption in India is on the rise due to growing awareness, government incentives, and a wider range of available EV models, and expanded charging infrastructure. Collaborations between the public and private sectors are crucial, particularly in strengthening charging infrastructure and overcoming the barriers to adoption.

Can collaboration between the public and private sectors accelerate the transition to EVs?

Through their combined expertise, resources, and influence, the public and private sectors can address major challenges hindering adoption. Joint efforts can expand EV charging infrastructure, enhance research and development to make more affordable EVs, and create supportive policies that promote adoption enhancing electric mobility.

What are the incentives and policies promoting the adoption of electric vehicles in India?

The central government in India has implemented various policies to boost the construction of EV charging stations, the use of renewable energy sources, and the purchase of EVs with low-cost financing options. State governments also offer subsidies and tax benefits to individuals and automobile manufacturers. Furthermore, many state governments are forming partnerships to address the existing challenges in EV adoption.

How does the collaboration of public and private sectors contribute to sustainable mobility and environmental benefits?

Joint initiatives between the public and private sectors aid in building charging infrastructure, crafting policies, and providing financial incentives that promote EV adoption. The private sector's innovation in EV manufacturing and technology complements the public sector's role in creating supportive policies and regulations. Together, they accelerate the EV transition, allowing all stakeholders to enjoy the environmental and economic benefits.

What role can technology play in facilitating the transition to electric vehicles in India?

Progress in battery technology can enhance range and charging capabilities, alleviating range anxiety. The emergence of bidirectional and vehicle-to-grid (V2G) charging can enable smart grid integration. Moreover, technology-driven solutions for EV manufacturing, including lightweight materials and electric drivetrains, can improve EV performance and affordability in India.

What are the long-term benefits and economic opportunities associated with accelerating the transition to EVs in India?

The long-term environmental and economic benefits are considerable. EVs can reduce carbon emissions and air pollution, improving public health and mitigating the impact of climate change. Additionally, EV growth can create new jobs and increase the potential for exporting EVs and related technologies. It can also lessen dependence on fossil fuels, enhance energy security, and establish India as a leader in electric mobility.

Resources

PwC: How can Public and Private Sectors Work Together to Accelerate Us Toward Net Zero?

Gain innovative insights into the public and private sector collaboration.

Arthur D. Little: Unlocking India’s Electric Mobility Potential

Discover the potential of EV Mobility in India.

WRI India: Just Transition and Skill Development in the Electric Vehicle Industry

Learn about skill development in the EV industry.

Delhi Government: Accelerating Electric Mobility in Delhi

Read about the measures taken to accelerate electric mobility in Delhi.

ORF: Filling the Gaps in Awareness and Policy

Understand the existing gaps and policy influence.


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