Indian automakers are formulating their electric vehicle (EV) strategies for the coming years, with frequent launches across various segments.

Companies such as Mahindra & Mahindra, Tata Motors, Ola Electric, Honda, and Maruti Suzuki are leading these efforts.

While the automotive sector navigates challenges on the road to electrification, a global brokerage firm has observed that India is likely to maintain a multi-powertrain landscape in the medium term.

In its note dated 28th November, the brokerage firm stated, "EV or not to EV: India is likely to remain multi-powertrain in the medium term."

The brokerage firm emphasised its long-standing view that India will continue to rely on a combination of powertrain technologies for a prolonged period. These include hybrids, compressed natural gas (CNG), and biofuels, which are considered practical solutions for the medium to long term (5-10 years) as the country transitions towards full electrification.

The role of multiple powertrains in decarbonisation

The brokerage firm highlighted that all powertrain technologies have a role to play in India's decarbonisation efforts over the next decade.

For any technology to succeed, benefits must extend to three key stakeholders: customers, original equipment manufacturers (OEMs), and the government.

The report also pointed out several challenges facing EV adoption:

- Government subsidies: EVs are currently costly for the Indian government, which provides some of the highest subsidies globally. These subsidies, covering GST, road tax, state incentives, and the Production-Linked Incentive (PLI) scheme, account for 40-50% of an EV's price.
- OEM profit margins: Despite subsidies, manufacturers face reduced profit margins on EVs, while market penetration remains low at just 2%.
- Consumer concerns: Customers remain hesitant due to factors such as range anxiety and uncertainties about resale value.

Medium-term solutions and emission norms

The brokerage suggested that hybrids can serve as a viable medium-term solution to support decarbonisation, provided they receive regulatory backing.

Even with a projected EV penetration of 30% by 2030, the overall vehicle fleet's EV share is estimated to remain under 10%. As a result, the majority of internal combustion engine (ICE) vehicles could transition to hybrids, CNG, or biofuels.

India is also preparing for the implementation of stricter emission norms, including Corporate Average Fuel Economy (CAFÉ) 3 and Bharat Stage VI (BSVI) Phase 3, over the next five years.

Increasing EV sales would facilitate compliance with these regulations, though the report acknowledged that achieving higher EV penetration will not be straightforward.

Powertrain distribution based on price segments

The brokerage firm projected that different powertrain technologies will dominate various price segments:
- Entry-level vehicles (up to Rs. 1 million) will likely focus on biofuels.
- Vehicles priced between Rs. 1-1.5 million may rely on CNG.
- Hybrids could dominate in the Rs. 1.5-2.5 million range.
- Fully electric vehicles are expected to prevail in higher price categories.

Well-to-wheel emissions comparison

The report also stressed the importance of assessing well-to-wheel (WTW) emissions to evaluate the environmental impact of different powertrains.

According to the brokerage firm, hybrid vehicles currently produce 34% and 25% lower WTW emissions than diesel and petrol vehicles, respectively, and 16% less than EVs.

The brokerage noted that for EV emissions to achieve parity with hybrids, the share of non-fossil power in India's energy mix must increase from the current 25-26% to 44%. This transition is expected to take 7-10 years.

The firm's analysis underscores the complexity of India's journey toward electrification, highlighting the critical role of diverse powertrain technologies in achieving sustainable mobility.