The analysis suggests that while electric vehicles (EVs) have a higher initial purchase price, they become more economical in the long run due to reduced operational costs, including cheaper electricity and lower maintenance expenses.
Axis Securities’ analysis highlights that, despite the relatively higher initial costs associated with electric vehicles (EVs) compared to traditional internal combustion engine (ICE) vehicles, various factors are making EVs more accessible. Government subsidies and the decreasing cost of batteries are significant contributors to this trend. Over time, EVs tend to be more cost-effective due to lower running costs, such as reduced electricity prices and fewer maintenance requirements.
The report further mentions advancements in battery technology that not only bridge the range anxiety associated with EVs but also enhance their long-term economic viability. Additionally, while ICE vehicles continue to benefit from an established fuel network, the infrastructure for EV charging stations is expanding rapidly, supported by both governmental and private initiatives.
In terms of resale value, ICE vehicles currently enjoy a more stable market, which significantly contributes to their popularity. However, as battery technology improves, EVs are beginning to catch up, which is expected to stabilise their resale value and secure their long-term market value.
Separately, a report by Bernstein indicates that the EV two-wheeler sector in India generates substantial annual revenues but faces losses without the support of incentives. The application of additional benefits like GST reductions has helped narrow the cost disparity between EVs and ICE vehicles. The report underscores the EV industry’s dependence on government subsidies and incentives to remain competitive.
To challenge the dominance of the traditional ICE market, the EV industry requires continued strategic focus, expansion to large-scale operations, and significant cost reductions. In support of this, the Union Cabinet recently approved the Ministry of Heavy Industries’ proposal for the ‘PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme.’ This scheme, with a budget of Rs 10,900 crore over two years, aims to promote electric mobility across the country.
