Although this shift from ice to ev promises a lot of opportunities, it also has its share of challenges, making it is essential for the automobile sector to make this transition in a ‘just and sustainable’ manner
Driven by its focus on transitioning to clean mobility, India is likely to achieve an Electric Vehicle penetration of 29-38% in 2030-31 and 47-67% in 2036-37, a new study by iFOREST has projected. Apart from bringing about widespread changes in the business models, this transformation journey from ICE vehicles to EVs will also likely have its own share of impacts across value chains as well as a large proportion of the workforce, a majority of whom will require a new set of skills given the growing footprint of digitisation.
While this from ice to ev shift promises to bring in a multitude of new opportunities, it also is poised to usher in new challenges, making it imperative that India’s automobile sector moves forward towards this transition in a “just and sustainable” manner. We take a look at what the EV sector is projected to look like in 2030-31 and 2036-37 in terms of its growth trajectory, impact on businesses and implications on the workforce.
What Is The Future of Electric Vehicles In India
Projecting a rapid pace of electric Vehicle production, the study estimates that with an anticipated annual growth rate of 38-42% from 2022 to 2030 and 15-16% from 2030 to 2036, the production of these vehicles is expected to range between 15.9 to 20.8 million units by 2030-31, and further ratchet up to 36 to 51.4 million units by 2036-37.
The EV penetration in the passenger car segment will be more gradual, said the study conducted by iFOREST under two scenarios – Current Policy Scenario and Aspirational Policy Scenario for two time frames – 2030-31 and 2036-37. It predicts that the highest penetration of EVs will be in the three-wheeler and two wheeler sections. The market share of e-three wheelers is expected to rise to 90% by 2030-31 and approach nearly 100% by 2036-37.
For the two-wheeler (2W) segment, adoption rates are forecast to range from 30-40% by 2030-31 and between 50-70% by 2036-37, it said.
Fig 1: An Electric three wheeler. Image: Associated Press
What Changes Will the Transition from ICE to EVs bring to Business Models
As the transformation gathers pace, the study projects that 45-84% of the spare parts of ICE vehicles — depending on the vehicle type — will become obsolete. About 90-100% of parts of an ICE vehicle’s powertrain will become obsolete due to the transition to EVs while the remaining, non-powertrain parts are likely to be impacted “moderately”.
Powertrain refers to a group of components that generate power and deliver it to the wheels. The obsolescence of parts in an ICE 2W will be 28%, 3W will be 37%, and in cars will be 12%. The study further explains that since there are many similarities in non-powertrain components, they can be repurposed for an EV.
To bring down the Total Cost of Ownership (TCO) of an electric vehicle, it is important to reduce the cost of the batteries. The study argues that the reason behind the robust market share of e-three wheelers in India is because the powertrain cost for an electric 3W is now lower than that of its ICE counterpart.
“On the other hand, for passenger cars, the powertrain of an EV is roughly 20% more expensive, primarily due to the higher cost of batteries. If the cost of the battery is set aside, the powertrain of an EV car costs less than half compared to that of an ICE car. Therefore, the reduction in battery and electronics costs is crucial for decreasing the TCO of electric cars,” it says.
Fig 2: Bajaj Chetak in an electric avatar. Pic Credit: Bajaj Auto
ICE to EVs: Transformation Impact On The Workforce
Given that ICE vehicles form the bulk of transportation mode in India at present, it also engages and employs a large number of workforce, working both in the manufacturing of these vehicles as well as the value chain like servicing and repairs. Given the scale of the transition, these workers too are going to be hugely impacted.
Manufacturing and Servicing dominates the jobs roles in the automotive industry, with an estimated 564 job roles in the sector. About 54% of them are related to manufacturing, followed by servicing and repairing accounting for an additional 16%. Research and development (R&D) and dealerships are the two other key segments accounting for 13.3% and 10.5% respectively, the study said.
The impact of the EV transition will be significant on the workforce, affecting 31% of the job roles in the ICE ecosystem. About 14% of the jobs are expected to become obsolete and 17% will require reskilling. The report added that 12.3% of jobs in the segment will require major reskilling interventions, in sub-assemblies such as transmission and driveline, among others.
Among the long list of measures, the study argues that it is imperative that the just transition vision of the automobile sector needs to be based on four pillars:
- Technology and skilling: To help promote advancement of technology and human resource development in the EV sector.
- Vibrant green manufacturing: To support the green growth agenda and make India the hub of clean auto manufacturing.
- Sustainable mobility choices: Transition from automobile as a product to mobility as a Service (MaaS) will promote sustainable urban mobility, reduce congestion and pollution.
- Green energy and material circularity: To help reduce the life cycle impact of EVs, through efficient energy and material use and recycling waste to the extent possible.
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