Wagering on power storage, rather than oil reserves
In the rapidly evolving world of electric vehicles (EVs), two major economies, China and India, are charting distinct paths towards electrification.
China's EV revolution has been shaped by a long-term, coordinated government policy. Substantial subsidies, trade-in incentives, purchase tax relief, and clear quantitative targets have been instrumental in driving the adoption of EVs. The New Energy Vehicle Industry Development Plan (2021-2035) sets ambitious targets, such as achieving EVs constituting 20% of total auto sales by 2025. Local governments are also allowed to implement tailored subsidies and non-fiscal incentives to meet these targets.
Generous subsidies, such as a one-time fixed subsidy for old vehicle trade-ins, have been key in triggering millions of sales. Purchase tax relief on EVs, combined with a competitive pricing landscape due to intense domestic production, has accelerated market penetration. China is now eyeing 80% EV penetration within a few years, having moved from early EV market shares (~5%) to nearly half market share in under a decade.
On the other hand, India's EV adoption is more fragmented. With lower per capita vehicle ownership, a strong reliance on two-wheelers and three-wheelers, and patchy infrastructure, India faces unique challenges. The focus is currently on electric two-wheelers, supported by more limited subsidies and regional policies. India's EV market is still nascent compared to China's, and rapid passenger car electrification is limited by infrastructure and economic factors.
However, India is not shying away from strategic interventions. Solar-plus-storage plants near highways, low-cost, reliable power for charging, and the deployment of Megawatt Charging System (MCS) depots along routes are some of the initiatives underway. A 2047 "no-oil transport" goal, with interim zero emission vehicle milestones for each vehicle category, would send a decisive market signal.
India should also invest in domestic production of battery materials and consider battery-leasing and battery-as-a-service models to lower capital expenditure for operators. Prioritizing electrification of heavy freight along high-density corridors can yield outsized benefits.
In conclusion, China's long-term, large-scale, and highly coordinated policy framework has driven rapid EV adoption, while India is still navigating structural challenges. However, with strategic interventions and focused efforts, India can build the necessary ecosystems for broader EV adoption, potentially leapfrogging its way to a cleaner, more sustainable future.
