I was talking to one of my college friends who recently bought a petrol car (Hyundai Verna 2023 edition). She lives in a metro city with most usage for commute & infrequent long drives (under 300 Kms).
During our conversation, I asked her - Why didn’t you buy an EV? There are a couple of good options in that price range now, aren’t they?
Being a CA by profession, her answer had two things - first, the range of anxiety. Second, resale price of the car with the ambiguity of battery life/ price point. Which I felt were fair for her specific usage. This got me thinking.
The “EV” vs “Petrol” car option.
The purchasing price point.
The Maruti Suzuki Swift Desire is the best selling in its segment with over 2.5 million units sold. In 2023, Swift sales were ~15,000 units per month, that’s 180K units per year with just one model. The average mass-market passenger car sales price is around ₹ 10 lakh, based on product’s f’s fuel and variant mix.
For any meaningful mass market adoption - the average EV price has to come down to ₹10L to ₹12L. This is the biggest adoption barrier for single car household.
Access to credit / financing.
This was broken until recently but things are opening up and we will see a lot more players giving better interest rates on EVs. This is at par with access to credit for conventional petrol/ diesel cars.Bank of Baroda is offering concessional rate of interest of up to 0.25 percentage points for EVs. This a good sign.
Range anxiety.
Let’s take the highest sold EV - the Tata Nexon EV (74% market share in 2023). It has an ARAI range of 453 Km on a full charge and takes ~60 mins to charge up to 80% with a DC charger.
This means range anxiety is more of a perception than a problem for those buying a car majorly for city commutes. On the other hand, EVs make little sense for long drives with limited access to DC charger.This is a huge challenge for commercial mass market adoption for EVs. This also means those with EV as the second house car might have early adoption but to still make EV as the only “household” car - we are still far behind due to miniscual DC charger infra.
Cost of fuel & maintenance + resale value
EVs win here with flying colors. Typical cost to operate a Nexon EV is under ₹1 per km. Typically city cars would do ~12,000 KMs & it’s exptremely cheaper than a petrol car that would cost at least 10X (₹1.2L) to drive the same distance. Plus, very minimal cost of repairs/ no oil change with an EV.The big catch - the uncertainity of the cost of battery replacement. Typical cost of battery is around 40% of the cost of the car - for most segments. The uncertainity also coming from resale value is a huge barrier.
EVs will get commoditised, eventually. Every thing that you think is a new shiny piece of tech will get commoditised.
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Thanks Abhishek for succinct article. My opinion and you did touch upon it although briefly in point No-3 is charging infra . This is the biggest blocker even for households looking for their 2nd car , for first car resale value and battery replacement economics etc definitely comes in picture.
However the lack of DC charging and fast charging is real issue. In cities ppl living in apartments can’t pull out charging points from their meters even if they can afford as it’s simply not feasible and societies providing the charge facilities in adequate numbers is equally unfeasible.
Thanks for the insight! But something that is worth mentioning on this topic is about battery management and recycling. Currently, the battery for 2 and 4W is around 6 years so what tends to happen in China is that post this period the battery is recycled. Apparently, the tech China has for it is really great. Also, something that goes unnoticed is that China is also really good at Battery management. When the battery looses 20% of its storage, the tech in China can refurbish the battery extending its battery life. At 40% loss of storage some level of refurbishment can still take place. Therefore, once battery recycling and management tech improves in India, a circular economy for battery is established. Then, we can solve a lot of cost and financing related problems.