Carmakers can’t turn out EVs cheap enough to convert Indians

Mahindra Funster Electric concept displayed at the Auto Expo in Greater Noida, near New Delhi on Wednesday. (AP Photo/Altaf Qadri)

“Mass adoption of electric cars in India will not happen unless the gap in upfront prices of electric and ICE vehicles is brought down,” said Shantanu Jaiswal, head of research for India at BloombergNEF.

To address this, Hyundai is working on a mass-market electric car for India, according to Tarun Garg, sales director at its Indian unit. The company plans a launch in 2-3 years, he said.

Apart from price, a lack of charging infrastructure that creates range anxiety and rapidly evolving technology, which promises to bring the cost of vehicles down, is also keeping potential buyers on the fringe.

“Pricing EVs at below 1 million rupees is going to be very difficult,” Pawan Kumar Goenka, managing director at Mahindra & Mahindra said in an interview. “The price we have done for e-KUV is very aggressive and the reason we’ve done that is to kick start the ramp-up of EVs.”

Maruti Suzuki India MD & CEO Kenichi Ayukawa with the concept Futuro-e.

Goenka expects a decline in cell prices and increased local manufacturing to bring prices down over 3-5 years. Lower prices could drive sales volumes, spreading the fixed costs and lowering prices even further, he said.

Muted Demand

Meanwhile, the muted demand for electric vehicles is keeping some automakers on the sidelines.

“In India, the problem is customer demand for EVs is not that great. For a new entrant like us, it frankly doesn’t make sense,” said Manohar Bhat, head of sales and marketing at Kia Motors India Pvt. “We came into the SUV segment because the largest demand is there — that’s the sweet spot for us.”

India’s government is pushing for a faster adoption of electric vehicles — hoping at least 15% of all vehicles on the road will be electric in five years starting 2018 — to deal with the deadly air pollution in its cities and curb carbon emissions from fossil fuels. An increased fleet of such vehicles is also seen as boosting demand for electricity, which has declined for five straight months ended December.