Why EVs aren't still mainstream in India?
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.
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.
Brand is the only differentiator that’s going to build preference for your consumer over a considerably long time be it EVs or any other product category. And this is exactly where most early stage startups either lack intent to solve this or the structure to implement the brand piece on and off the product.
Last year, this led me to sit down with 10s of Chief Marketing Officers, successful founders who figured out “brand” for their companies early on. Particularly, conversations with Swati (Ex-CMO, Netflix India) were a huge delta.
Having worked with her during my time at CRED & her experience in the last 20 years leading marketing for global brands including the India market for Netflix, National Geographic & others helped us build conviction.
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