Increased adoption of EVs in Tier-2 and Tier-3 cities can add pace to the clean energy drive in India

Increased adoption of EVs in Tier-2 and Tier-3 Increased adoption of EVs in Tier-2 and Tier-3 cities can add pace to the clean energy drive in India


It’s globe Earth Day, and as the globe moves closer to a more sustainable way of life, mobility is changing dramatically. The adoption of electric vehicles in smaller cities can spur economic growth and development. In the last 6-7 years, the industry has advanced along a steep technological curve, increasing consumer familiarity, trust, and reliability with EVs.

Electric vehicles (EVs) had remarkable growth in the Indian market in 2022, with sales increasing thrice over the previous year. 

According to official figures, Indians have purchased 2.78 lakh EVs since January 2023, an average of more than 90,000 EVs per month. Significantly, demand for EVs is expanding not only in big areas like Delhi, Mumbai, and Bengaluru but also in Tier-2 and Tier-3 markets.

On the occasion of World Earth Day, experts from the International Council of Clean Transportation (ICCT) and The Energy and Resources Institute (TERI) believe that rising knowledge of the environmental and cost-saving benefits of electric vehicles (EVs) is driving EV demand in the country. 

“Transitioning to EVs in Tier-2 and Tier-3 cities will also help lessen India’s dependence on fossil fuels, cut import bills, and reduce air pollution,” said Amit Bhatt, Managing Director for India, ICCT. This change will result in a self-sufficient and sustainable energy ecology that will greatly contribute to the country’s economic prosperity.”

He also discussed the associated economic benefits of a rising EV ecosystem. “Developing local supply chains and manufacturing capabilities is especially important because it can create jobs and lower the cost of EVs, making them more affordable to consumers.” If the government offers tax breaks, low-interest loans, and other financial assistance, as it does in larger areas, it will expedite EV adoption in smaller cities, he says.

Sharif Qamar, Associate Director and Area Convenor, Transport and Urban Governance Division, TERI, believes that there are seven areas of focus for accelerating EV adoption across different geographies: institutional and policy readiness; infrastructure readiness; technology readiness; economic readiness; social readiness; environmental readiness; and innovation readiness. In terms of EV penetration in the Indian market, Qamar stated, “India is one of the world’s largest two-wheeler markets.” Two-wheelers make for over 80% of the country’s vehicle population. Nonurban markets account for 50-60% of overall sales. With additional OEMs and models entering the market, we foresee a strong increase in demand for electric two-wheelers due to both push and pull elements of demand generation.

“According to ICCT’s official estimations, an aggressive vehicle electrification pathway – in which EVs might account for 95 percent of all new vehicle sales by 2040 – can help reduce tailpipe emissions by 18-50 percent, depending on the pollutant. “One of our recent studies revealed that, even with the existing grid, EVs in India currently emit between 19-34 percent less greenhouse gas emissions over their entire life cycle, as compared to traditional internal combustion engine cars,” Bhatt added. Electric two-wheelers result in considerably larger emissions reductions, ranging from 33 to 50 percent. These emissions could fall even further as India works to decarbonize its system. 

This is fantastic news and cause for optimism, as it offers a clear path towards cleaner road transport.” Rising concerns about air pollution and climate change; central government incentives and policies, such as the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles scheme; state-level EV policies; declining costs of EV batteries; technological advancements; and growing investments in EV manufacturing and charging infrastructure by domestic and international players. Together, these aspects are paving the path for the country’s mobility to have a clean, sustainable future.

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