Globally, Li-ion battery pack prices have seen a 90% reduction between 2010 and 2020, and another 40-50% reduction is expected by 2030.
In the transport sector, the increasing commercial viability of EVs has led to 13% of new passenger vehicle sales and 40% of global bus sales being electric. The International Energy Agency estimates that over 300 million electric vehicles will be on the road globally by 2030.
India’s transport sector is the fastest-growing source of CO2 emissions and a significant portion of national energy expenditure. The past two decades have seen a significant increase in energy demand in the transport sector due to a rise in freight activity and an increase in the number of light and heavy freight trucks. Energy use in India’s transport sector has increased fivefold over the past 30 years, reaching more than 100 mtoe in 2019.
While other sectors are fueled by diverse energy sources, transport in India relies almost entirely on oil, which meets nearly 90% of demand. India’s limited domestic oil resources create significant dependence on crude oil imports, costing the country $150 B in 2022. If demand continues to grow rapidly, expenditure on oil imports will also increase. Reliance on oil imports makes India vulnerable to global crude oil price shocks, which reverberate throughout the economy. Moreover, air pollution from the transport sector results in adverse health effects and premature deaths.
Our analysis has estimated that a shift to electric transportation can create $2.5 trillion (INR 19 million crores) in net consumer savings by 2050 from reduced fuel and maintenance costs, even after accounting for the high upfront costs of Electric Vehicles (EVs). For this accelerated electric vehicle pathway, India would need 200,000 tons of lithium per year by 2045. This demand can be domestically met with reserves that have recently been discovered in northern parts of the country.
The transport sector is also one of India’s largest industries, with both millions directly and indirectly employed in manufacturing, supply chain, and maintenance and repair sector. At the same time, there is an urgent need for India to build out its electric charging infrastructure, its electric maintenance workforce, and transition the auto-sector towards EVs to stay globally competitive. India’s Department of Heavy Industry (DHI) has announced a Production-Linked-Incentive (PLI) scheme for enabling domestic manufacturing of batteries and EVs.
Setting Zero Emission Vehicle (ZEV) sales targets, that mandate a certain percentage of new vehicle sales be ZEVs, could provide the guaranteed demand signals for shifting OEMs from internal combustion engine (ICE) production lines to electric. Fast-charging networks along major trade routes and highways will be crucial for electrifying freight and long-distance passenger transport.