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India Electric Vehicle Sales To Grow At 26% Over 2020-23: Fitch Solutions

The firm forecasts that electric vehicle sales in Asia will expand by 78.1 percent in 2021.

SINGAPORE — Recent vehicle purchasing incentives (such as a scrappage scheme) announced by the Indian government and high fuel prices in the country will aid more robust adoption of EVs over 2020-2023, according to the American credit rating agency Fitch Solutions.

The agency expects the incentives and people switching to EVs would lead to an average annual growth rate of 26 percent in EVs.

“We believe the focus on EV promotion in Union Budget will improve the longer-term outlook for EV sales but will continue to fall way short of the country’s goal of electrifying all new vehicles sold by 2032,” Fitch Solutions said.

The key autos-related elements include an additional excise duty of INR 1 per liter of diesel and petrol, lowering of Goods and Service Tax on EVs to 5 percent from 12 percent previously, and other income tax incentives given to individuals who purchase EVs.

However, it said the economic impact of Covid-19 and limited domestically produced EVs would prove a challenging barrier to overcome.

“The surge in Covid-19 infections from April 2021 will slow the initial demand for new vehicles. However, we expect sales to pick up again once the current (time of writing June 15, 2021) wave of infections is brought under control,” the agency said earlier.

Limited domestically produced EVs will prove a challenging barrier to overcome.
Limited domestically produced EVs will prove a challenging barrier to overcome. (ANI)

“We, therefore, forecast that India’s vehicle sales in 2021/22 will increase by 19.1 percent to reach an annual sales volume of just below 4 million units.”

S&P Global Ratings said on June 21 that the world’s biggest battery producers globally face substantial upside and downside risks to ratings.

“The battery sector has entered an extremely dynamic phase,” said S&P Global Ratings credit analyst Stephen Chan.

“Firms face substantial growth opportunities as electric vehicles rapidly replace legacy autos. This will require a heavy upfront investment in a battery standard that may be quickly eclipsed by superior technology. Many moving pieces may contribute to sharp ratings moves, up or down.”

Chan said: “The battery supply chains in the U.S. and Europe are underdeveloped and will need years to catch up to players such as China.”

In the overall Asia region, according to Fitch Solutions, the EV market would continue to grow at a fast pace as more countries look to support EV uptake, reduce emissions and attract EV-related manufacturing investment.

Fitch forecast that EV sales in Asia will expand by 78.1 percent in 2021, up from the estimated growth of just 4.8 percent in 2020.

Total EV sales in the region would reach a high of just under 10.9 million units by the end of 2030, up from an estimated sales volume of just over 1.4 million units in 2020.

“We believe that the strong demand for electric EVs in markets such as China, South Korea, Australia, and New Zealand will result in the Asia region’s vehicle sales recovery to lead all other regions over 2021,” it said.

Over 2021-2029, most EV demand will stem from the three most advanced economies in the Asian region — China, Japan, and South Korea — given their financial strength and commitment to reducing their emissions.

(With inputs from ANI)

(Edited by Anindita Ghosh and Amrita Das)