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Who Will Win The Race For India’s Emerging EV Market?

While India has the fifth-largest automobile market and some of the world’s worst smog, the subcontinent has been relatively slow to adopt electric vehicles. However, all of that is about to change. Not only is the EV industry pushing hard to develop (and dominate) the Indian automotive market, industry insiders furthermore project a huge spike in EV demand (15-fold in the next five months alone) in India in the coming months and years thanks to skyrocketing fuel prices, increased demand for commercial use and government incentives to make EV adoption a much more affordable option.  

While India stands at number five for auto markets now, it’s projected to shoot up to number three by just 2030 as the economy bounces back from the novel coronavirus pandemic and the nation’s enormous middle class continues to expand. In 2020, about 3.49 million passenger and commercial vehicles were sold in India.

India also holds serious sway as an auto manufacturer, currently ranking as the world’s seventh-largest. That, too, is appealing to EV makers who are looking toward India to base their electric car plants. Almost exactly a year ago, Oilprice reported that Tesla was setting its sights on India as the base of its newest branch, writing “if Tesla pushes assertively into Indian markets, as it has been considering, India could account for as much as 10% of Tesla’s total demand in less than ten years.” 

Just this year, Tesla has incorporated Tesla India Motors and Energy Pvt. Ltd in Bengaluru and Elon Musk wrote on Twitter that it is “quite likely” that Tesla will soon build a local factory in India if all goes well with vehicle imports. However, that remains a relatively big “if,” as the country has an especially high import duty on cars. “At present, cars imported as completely built units (CBUs) attract customs duty ranging from 60-100%, depending on engine size and cost, insurance and freight (CIF) value less or above $40,000,” reports The Economic Times of India.  

Related: Aramco CEO: Underinvestment In Oil Is A ‘’Huge Concern’’

Despite the prohibitively high taxes, Tesla is far from the only EV company trying to push into Indian markets in time to position itself at the forefront of the country’s impending EV boom. The newest entrant into the race the brand new EV venture by Taiwanese tech giant Foxconn. Last Monday the company, which is one of the largest tech companies in the world and the largest private employer in China, unveiled three new concept electric vehicles, as well as its plans to manufacture those EVs in India, Brazil, and Europe, among other places.

Like Tesla, Foxconn is dreaming big. While Tesla has set its ambitions on 20 million vehicles by 2030, Foxconn has said that it aims to “provide components or services for 10% of the world's EVs by 2027” according to reporting by The Economic Times. These global giants will also be met by some homegrown competition. A number of Indian EV-makers, including Ather Energy, Tata Motors, Ola Electric, Hero Electric, and Mahindra Electric already have considerable footholds in the industry. 

The Indian government has shown that it is ready and willing to support the widespread adoption of electric vehicles. “Both state and central government entities are ramping up incentives to make EVs more accessible and affordable,” Oilprice reported last month. “The government is targeting EV sector growth as a means to lower dependence on foreign crude imports and to improve the country’s infamously poor air quality.” Indeed, India has signed on for the global EV30@30 campaign, in which nations aim to make 3 out of every 20 new car sales an electric vehicle by 2030.

This is great news for India, but also for the rest of the world. As the window of opportunity to cut global greenhouse gas emissions enough to avoid the worst effects of climate change closes, every move away from fossil fuels helps. A country the size of India has an outsized effect on the worldwide fight against global warming. It's inevitable that the nation’s still-growing population of 1.38 billion people will continue to have an increasing appetite for new vehicles. It’s imperative for all of us that the demand for electric vehicles grows along with it. 

By Haley Zaremba for Oilprice.com

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