Climate change has become one of the most pressing issues across nations. While there have been many factors exacerbating the climate concerns, one of the major contributors to it is the transport sector. The role of transport decarbonisation in global climate action is garnering attention, as governments try to draft supportive policies towards the adoption of sustainable practices and achieve a carbon neutral status. Numerous initiatives are being taken to support the growth of electric vehicles (EVs) globally, resulting in a 39.1 per cent y-o-y growth in the units sold in 2022.

For India as well, 2022 was a prominent year for EV sales, crossing the one million threshold. In the current scenario, two wheelers and three wheelers have been driving most EV sales, as these categories fulfill most of the requirements for switching to an electric fleet. High route predictability, economic viability and ability to use private chargers are some of the factors pushing adoption within these segments. Additionally, the B2B segment has been driving the sales of electric four-wheeler and buses. Favourable government policies, robust charging infrastructure and focus on decreasing the cost of ownership could further lead to higher penetration into segments, including buses and LCVs.

With the advent of EVs, a lot of technological transformation has also come into play. For instance, the engine from traditional ICEs is replaced by a battery, accompanied by a Battery Management System (BMS), while the transmission has been replaced by motor and a controller. As technology takes the centerstage, new suppliers of crucial and new components could enter this domain, leveraging new business opportunities this space has to offer. Accordingly, a large portion of the automotive ecosystem will need to be rebuilt and customised to meet the future requirements. While there has been a lot of focus on digitisation, there have also been continuous efforts towards alternative battery technology. Next-generation technologies, such as advanced chemistry cells are being explored for the development of batteries using alternative raw materials that are abundant in nature, are cost effective, and are impacted less by market volatility. All such technologies are being continuously tested and are either in the concept, prototype or demonstration stages. While ACCs are being developed globally, there is also a push towards localising the production of Li-ion batteries in India. The government of India is therefore undertaking measures towards local manufacturing and has rolled out the Production Linked Incentive (PLI) Scheme, incentivising the manufacturers for lithium-ion battery production. Advanced telematics and IoT enablement, virtual diagnostics, application-based monitoring, and OTA updates are also being developed in parallel, as part of innovative digital solutions.

Technology is also permeating into the support infrastructure and wider ecosystem as well. Traditional companies have been reluctant to enter the EV financing market, owing to the fears around technology obsolescence, customer defaults, manufacturer bankruptcy and low resale value, in addition to higher interest rates and limited financing options. Consequently, small NBFCs and fintech start-ups are planning to leverage their first-mover advantage in the EV lending space. While incumbents are still evaluating their entry into EV financing, these players are infusing technology into the financing space with digital payments, vehicle maintenance, tracking and utilisation of data to assess risks, among others. Technological innovation is eminent in charging solutions as well, enabling faster charging technologies, integration with digital payment platforms, wireless charging and smart features. Artificial intelligence (AI), Internet of Things (IoT), and other cutting-edge technologies are also helping enhance utilisation while maximising the effectiveness and performance of products. In addition to this, end of life solutions are also being assessed to make the best use of the batteries, including battery recycling and second life application of batteries, alongside battery waste management.

While newer innovations are flourishing all across the EV landscape, a lot of new business opportunities and models have also emanated through EV adoption. The development of charging infrastructure is transitioning away from standalone charging stations to fragmented destination-based chargers. This is enabling ease of access and financial feasibility. Another model gaining traction is Battery as a Service (BaaS), which aims to reduce charging wait times along with high upfront cost of EVs. Battery leasing is another area that is being explored by companies, offering better flexibility to consumers when it comes to eliminating the cost disadvantages of purchasing an EV that comes with a high investment and other factors causing apprehensions around an EV purchase. Notably, new business opportunities are stemming as companies innovate throughout the EV value chain.

Technology is playing a major role in driving the momentum in the EV domain. Many of these technologies are going to become standard offerings in the future and addition of newer features and solutions is going to be a continual process. This is where start-ups are going to gain an edge, and will play a major role in offering a technical niche, hence, outperforming the traditional players in this space. While EVs have become a part of strategic action plan for some of the traditional players recently, the start-ups have capitalised well on the growing opportunities EVs have to offer. Therefore, it would be imperative for industry peers to develop the right technological capabilities and drive faster digital adoption to utilise the full potential of the growing EV industry. This is a fast-paced ecosystem and would demand continuous innovation from both existing peers and new entrants.

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