New consumer demands pertaining to product features, charging, channel preferences, flexible ownership models, and other topics are arising as India’s shift to electric vehicles picks up speed. With 70% of tier-one Indian auto buyers saying they would be open to considering an electric car for their next vehicle, compared to the record-high global average of 52%, India is well-positioned to embrace the future of electric vehicles (EVs). Although the market for internal combustion engine (ICE) vehicles in India has grown recently, the swift switch to electricity marks a significant turning point for the nation. EVs are now more widely available at the same time. Current automakers have set aggressive goals for electrifying their product portfolios. Models created especially for India’s metropolitan settings have been introduced by newcomers. Additionally, EVs’ total cost of ownership, which has previously been a barrier for EV buyers, is now comparable to that of ICE cars. Because of this, it is anticipated that by 2030, the market share of EVs will increase to 10 to 15 percent, which presents a substantial opportunity for grid operators, OEMs, financial institutions, and other stakeholders.
Consumers are largely on board with EVs because sustainability is increasingly important
According to consumer sentiment, the switch to electric vehicles will accelerate. With a definite preference for pure battery electric vehicles (49 percent) over plug-in hybrid electric vehicles (21 percent), the overwhelming majority of individuals are considering EVs for their next automobile purchase (Exhibit 1). These inclinations are in line with our study on electric two-wheelers, which found that 86% of buyers would think about purchasing an EV as opposed to 69% who would think about purchasing an ICE car. This desire for EVs is fueled by a variety of factors, with prospective buyers citing the environmental impact (67 percent), lower total cost of ownership (26 percent), and less engine noise (26 percent) as the main advantages of driving an EV.
Since sustainability is the top consideration when purchasing a car and using mobility, it is true that general concerns about sustainability are affecting Indian consumers’ demand for EVs. In actuality, 75 percent of Indians are beginning to (or have already) modify their behavior and purchase patterns in response to sustainability considerations, demonstrating how sustainability is beginning to have an increasing impact on consumer choices across the board in India. The most prevalent of these improvements are testing sustainable products and services more frequently (20 percent), positively advocating for sustainable products and services (23 percent), and interacting with and being more loyal to sustainable brands (27 percent).
Along with safety, brand, and price, customers rank sustainability as one of the top five factors they look for in a car (Exhibit 2). In the dominated two-wheeler market, where this choice was one of the top three purchasing reasons, the desire for zero-carbon vehicles is also apparent.
Convenient charging points and long-term test-drives will accelerate adoption
Alongside all of this momentum for sustainable mobility, certain legitimate issues have surfaced that may affect adoption, such as battery safety and life, purchase price, charging time, and technological dependability. One of the main elements driving the transition to electric mobility is the increased accessibility of charging stations. Low perceived preparedness of charging infrastructure: over 75% of all consumers questioned believe that India’s charge station infrastructure is still lacking.
Despite seeing home charging as more affordable, accessible, and handy, Indian consumers have nearly similar preference for public charging (58 percent and 42 percent, respectively). Although 30% of consumers might improve their home setup in accordance with this, only 55% of consumers have access to home charging. However, EV adoption is unlikely to be hampered by Indian consumers’ restricted access to home charging. Even if they couldn’t be charged at home, two-thirds of Indian buyers would still purchase an EV. However, 38 percent of customers believe there is not an adequate network of charging facilities in their local locations, which is similar to what we discovered in our research on electric two-wheelers. Therefore, making investments in household and public charging stations is essential for the continued uptake of EVs. Charging speed (49 percent) and cost (41 percent) are the most important variables affecting people’s decision to charge in public, followed by site safety (28 percent). In actuality, the majority of individuals are prepared to pay an additional 10 to 20 percent for the convenience of rapid charging.
The test drive experience was another important factor affecting prospective EV buyers. Twenty-four percent of those who are now hesitant to buy an EV stated that the test drive experience is a crucial turning point in the entire buying process. In order to reduce customer concern while embracing new products and technology, OEMs may want to think about combining the ease of at-home services with extended test rides (spanning seven to 10 days).
Improvements in vehicle safety and the provision of improved maintenance infrastructure are two other important elements that may contribute to a greater adoption of EVs. Furthermore, an increase in gasoline prices and a greater awareness of the overall cost of ownership of EVs might move more buyers into EVs.
The transition to electric cars will change the purchase journey
The market for purchasing and selling automobiles is undergoing significant change as the shift to electric vehicles takes place. Indian customers are willing to purchase automobiles online and prefer to communicate with companies via a streamlined, digital procedure that offers greater convenience and flexibility. Most Indian consumers are prepared to complete the majority of their car-buying process online. Approximately 40% of consumers are willing to make purchases online, while over 70% of consumers begin their shopping journeys online. Nonetheless, over 90% of the same customers require a face-to-face interaction with an OEM or dealer. This is true for highly personalized interactions like test drives, services, responding to inquiries regarding the car, or haggling over the best prices.
People who prefer to interact with brands through websites and apps strongly choose doing so over dealing with dealers or other third parties at each of the important touchpoints of the purchasing process (Exhibit 4). Car dealers continue to play a crucial (although modified) role in the entire buy and post-purchase process, indicating the rise of hybrid direct-to-consumer models.
Additionally, Indian consumers are increasingly choosing flexible ownership alternatives. Although the majority of buyers (about 79 percent) still favor buying a car altogether for their next vehicle, they are progressively choosing more flexible ownership options like pay-per-use, subscription, or leasing.
New market prospects for flexible ownership choices, including leasing, are being created by shifting ownership preferences that result from a desire to have more flexibility and convenience as well as access higher-value assets. The moment is right for market participants to adjust, as our global poll found that consumers in other regions are likely to switch brands for flexible car purchases.
Consumer appetite for EVs has implications for mobility stakeholders
As they strive to meet customers where they are in their journey toward EVs, these trends bring up significant issues for many mobility ecosystem players.
In many instances, automakers may find that electric vehicles represent a significant area for expansion. As consumer pull increases and governmental policies become even more advantageous, the share of electric vehicles in total revenues may grow in the future.
Conclusion
Electric automobiles may provide new players a chance to enter a rapidly expanding market that is receptive to changes in car usage (such as entirely leased) and purchase (such as online channels). In order to meet the increasing demand for electric vehicles, auto dealers may also need to modify their sales and service offers. This may involve developing their digital and technological skills to provide omnichannel experiences. system operators and other supplier stakeholders will probably see a rise in demand for power, necessitating the expansion and modernization of current infrastructure as well as the integration of new technologies to maximize system utilization. Additionally, cities will play a significant role in directing the EV transition by putting in place the necessary infrastructure for charging needs and enacting sensible legislative measures. In fact, the move to electric vehicles in India has ramifications that go well beyond OEMs and may play a crucial role in the country’s transition to a more sustainable future.