Other BriefingsFuture of Mobility in India: Clean, Shared, and Automated Transport
Clean mobility is getting a serious push in India, benefitting from government policies, industry transition, and renewable energy solutions. As transportation continues to claim a major share in India’s growth story, factors like technology, accessibility, affordability, and sustainability is expected to redefine mobility solutions.
India’s transportation sector, which presently contributes 6.3 percent to India’s GDP, is also the third highest contributor of CO2 equivalent emissions with a sectoral share of 13.2 percent. Within this sector, road transport is responsible for 90 percent of this sector’s total energy consumption.
However, the transportation sector in India today stands at the crossroads of an inevitable revolution. Along with the global automotive industry, mobility in India, too, is undergoing a paradigm shift to transition towards cleaner alternatives. This is in part facilitated by technology, which is enabling alternative modes of transport, and partly motivated by obligations to mitigate climate change, besides the escalating cost of conventional fuels and their declining resource base.
In addition, India’s expanding user base presents the country with an opportunity to become a global leader in innovating new mobility solutions as well as manufacturing.
The most recent trends in India’s automotive segments include deployment of artificial intelligence (AI) in vehicles and adopting mobility as a service. Leading firms in this space are Uber, OLA, Zoomcar, etc.
India’s need for clean mobility solutions
A major factor driving India’s transition towards cleaner alternatives include the burden and uncertainty associated with oil imports, rising pollution levels due to vehicular emissions, over-congested roads, and international commitments to combat global climate change.
In 2021, at the 26th Conference of Parties (Glasgow), India committed itself to achieve the target of net-zero carbon emissions by 2070, along with increasing its non-fossil capacity to 500 gigawatts by 2030. India also committed to reduce one billion ton of the total projected carbon emission between 2021 and 2030.
Recent policy initiatives by the central government are steering the country towards achieving these essential climate goals. Along with measures like leapfrogging from BS-IV norms to BS-VI norms, production-linked incentive schemes (PLIs), FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles), National Green Hydrogen Policy, Biofuel Policy etc., the government is also pushing for clean mobility through corporate rebranding programs and electric vehicle (EV) awareness drives.
Furthermore, consumer information tools, such as the Green Vehicle Rating (GVR), are also a step towards advocating clean mobility to consumers.
As per estimates, India’s transport sector can save 1.7 gigatons of cumulative carbon dioxide emissions and avoid about 600 million tons of oil equivalent (Mtoe) in fuel demand by 2030 through shared, electric, and connected passenger mobility and cost-effective, clean, and optimized freight transport. India’s EV thrust will also help fulfil its global commitments to lower carbon emissions and increase use of cleaner sources of energy and transportation as required by the Nationally Determined Contributions (NDCs) under the United Nations Framework Convention on Climate Change (UNFCCC) and EV30@30.
As per industry reports, India stands in a strong place to deploy EVs at scale due to rapidly declining costs as a result of technological innovations.
Additionally, alternative ownership models, including battery-swapping, have brought the cost of EVs at par with internal combustion engine (ICE) vehicles.
According to an independent study by the CEEW Centre for Energy Finance (CEEW-CEF), the EV market in India will be a US$206 billion opportunity by 2030 if India maintains steady progress to meet its ambitious 2030 target. This would require a cumulative investment of over US$180 billion in vehicle production and charging infrastructure.
Another report by India Energy Storage Alliance (IESA) projects that the Indian EV market will grow at a CAGR of 36 percent till 2026. The EV battery market is also projected to grow at a CAGR of 30 percent during the same period.
Market preferences for electric mobility
In India, electric mobility is currently led by the two-wheeler and three-wheeler segments. Data from the Federation of Automobile Dealers Associations (FADA) showed retail sales of EVs jump three-fold in 2021-22 (April-March) at 429,000 units, dominated by two-wheelers. Top selling brands were Hero Electric Vehicles Pvt Ltd (65,303 units), followed by Okinawa Autotech Pvt Ltd (46,447 units), Ampere Vehicles Pvt Ltd (24,648 units), and Ather Energy (19,971).
In the four-wheeler segment, 17,802 units were sold–compared to 4,984 the year before. Popular brands were Tigor and Nexon EV by Tata Motors (15,198 units), MG Motor (2,045 units), and Mahindra & Mahindra (156).
Impact of the pandemic to be felt in the near term
Despite various measures encouraging the adoption of shared electric mobility, such as electric buses, the COVID-19 pandemic disrupted India’s steady transition towards clean mobility. Social distancing, hygiene concerns, and financial constraints temporarily inclined consumer preferences towards more affordable and conventional personal mobility options.
Additionally, the flexible work arrangement reduced movement for many white-collar professionals. In the near term, the higher costs of passenger EVs will likely be a constraint for many consumers, and it is expected that the demand for entry-level cars, used cars, and two-wheelers will stay on an upward trajectory.
The market for green hydrogen
Green hydrogen, a source of clean energy and industrial feedstock, has trended across much of recent international climate agenda. Estimates by Allied Market Research peg the valuation of India’s hydrogen market at US$81 million by 2025, projecting a growth of 6.3 percent from US50 million in 2017 till 2025. According to a study by the Council on Energy, Environment, and Water (CEEW), green hydrogen demand in India could go up to 1 million tons across multiple sectors, including ammonia, steel, methanol, transport, and energy storage.
Several companies, such as Gas Authority of India Limited, Adani Group, Bharat Petroleum, Larsen & Toubro (L&T), Indian Oil Corporation (IOCL), Renew Power, and others have declared their intentions to enter the green hydrogen space. According to a joint statement released by ReNew and Larsen & Toubro, green hydrogen demand in India for applications, such as oil, refineries, steel, fertilizer units, and city gas grids, will grow up to two million metric tons per annum by 2030, demanding investments upward of US$60 billion.
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