What is Holding Up the Electric Car Adoption Market in India?

Auto Makers Race to Build a Cheaper Electric Car for India, Other Growing Markets

The world's auto makers are vying to build an affordable electric car to target drivers in emerging economies and potentially create a competitor to Chinese-made vehicles.

From article, ([India] Industry executives say that for people to switch to electric cars, their price tags have to be comparable to regular cars, the most popular of which in India cost between $6,000 and $8,000. High battery prices are one of the main hurdles for companies trying to build cheaper electric cars.

In the U.S., the best-selling electric vehicles tend to cost more than $30,000. Globally, some electric vehicles sell for less than $10,000, but only after large government subsidies and rebates.

To create enough demand to reach the economies of scale that would bring prices down further, governments need to continue subsidizing consumers while they spend billions building necessary infrastructure such as charging stations, industry executives say.

“We need (China’s) single-minded focus to push electric vehicles” in India, said Guenter Butschek, chief executive of Tata Motors Ltd. , India’s largest auto maker by revenues and the owner of Jaguar and Land Rover. “As the sales volume of mild hybrid and EV in other markets—especially China—ramp up, costs will reduce, making it easier to further grow our market.”

 Auto companies are also betting prices will fall as technology improves and a new wave of battery-making capacity comes online and forces further competition. Batteries are perhaps the most important component in car makers’ quest to create an affordable EV.

At current battery prices, an electric version of Suzuki’s best-selling Alto model, for example, would theoretically cost more than double the standard $5,500 price, said Kenichi Ayukawa, chief executive of Maruti Suzuki, which dominates the Indian passenger car market with close to a 50% market share.

Suzuki plans to launch an EV for the Indian market in 2020, but it is unlikely to be a big seller unless costs fall, he said.

“The battery cost is still very expensive. We need more improvement in that area,” Mr. Ayukawa said. “As long as we cannot provide an affordable price, the customer will not buy.”)

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