In the post-COVID world, demand for EVs may be impacted in short term: FICCI

• The impact of COVID-19 could make consumers more risk-averse to new technologies and higher-priced vehicles, such as EVs

• The downward trend in fuel prices would negatively affect the cost-benefit of EVs in the medium term

New Delhi: A large number of factors may impact the demand for the Electric Vehicles (EVs) for the next two to three years in a significant way and would require continued support from the government to create consumer preference towards EVs, said FICCI on Wednesday. The impact of COVID-19 could make consumers more risk-averse to new technologies and higher-priced vehicles, such as EVs, noted FICCI EV Committee. FICCI's Electric Vehicle Committee is headed by Shekar Viswanathan, Vice Chairman and whole-time director of Toyota Kirloskar Motors, and co-chaired by Sulajja Firodia Motwani, founder and CEO of Kinetic Green.

Cheaper fuel will negatively affect the cost-benefit of EVs

Further, the downward trend in fuel prices would negatively affect the cost-benefit of EVs in the medium term. The adverse impact of supply chain disruptions is also more likely on EVs than the ICE vehicles, mainly because the supply chain for EVs in India is beginning to get established, vis-a-vis a long-established supply chain for ICE vehicles.

However, the propensity of change in consumer behaviour may not be the same across all segments of EVs, FICCI said. Certain segments like two-wheelers and three-wheelers may not be impacted in the long term. E-Bus segment will be affected as STUs (State Transport Undertaking) may not have sufficient funds for the procurement. Additionally, factors like fall in diesel prices and concern of fund availability will further impact the demand for EV buses and this may encourage STUs to buy ICE (diesel) technology buses. To sustain the efforts made towards electrification and to attract investment, adopting technology agnostic approach would be an appropriate pathway to achieve India's EV targets, FICCI said.

'COVID 19 has affected the already struggling auto sector adversely'

Viswanathan said, "In the recent past, the overall auto sector hasn't been performing well and the current COVID 19 outbreak has further exacerbated the situation. Electric mobility, which is in the nascent stage, is also not insulated from this impact. To understand the ground realities, FICCI arranged for inputs from its members for feasible recommendations to the government to ensure the sustainability of EV offtake in the country as well as possible measures to attract investment for EV parts manufacturing, especially in the wake of global development. We received many useful suggestions which FICCI will be recommending to the government for their consideration." 

Describing the situation as a testing time for the EV industry, Motwani, Founder and CEO of Kinetic Green, and co-chair of FICCI EV Committee said, "EV sector has received good support from the government in last one year, and that led to a spurt in sales of EVs. It is very important that the nascent sector is supported during these challenging times in view of the long-term significance of EVs for the reduction of air pollution and towards fuel security. We will be recommending the extension of the FAME II scheme by at least one year to 2023. We will also put our efforts to secure support electric vehicle financing from Banks and NBFCs in a major way. To boost investments by EV component suppliers, focus on Make in India, and unwavering support by GOI to EV sector will be crucial. I am confident that the EV industry will sustain, recover & rebound from this demand downturn."