Why EV Cars are Costly in India

The current trend of EV cars in cities attracts a lot of people as its on-road per km cost is quite low and maintenance is lower than a petrol-based or CNG-based car. But when you show your interest in purchasing a new EV car, then its expensive price stops you from buying it. The EV cars are 50% to 60% costlier than petrol cars and here people ask why EV cars are costly in India and when its price will drop.

At present in India, if you check the price of the Tata Tiago petrol variant with Tata Tiago EV, then you can see how much the Tiago electric car will cost you. Same with other car models like Citroen C3 vs eC3, Tigore vs Tigore EV, you will find that the electric version will be costlier than a fuel operated car.

To sort out this confusion, here we are to help you and reveal the real reasons why the cost of EV cars is more expensive in the Indian car market than a petrol car in the same model.

Research and development

A study by McKinsey & Company found that EV R&D costs can be 2-3 times higher than those of traditional gasoline vehicles. This is the main part of every product and in the EV segment cars, this phase takes a lot of effort and time.

As EVs still need significant improvements to performance and safety, automakers invest heavily in R&D. To get the funds for R&D, companies set the EV price high which makes the EV costlier as compared to petrol cars.

Import of Li-ION Batteries

The main source of energy in EV cars is the battery pack which the company places on the floor. This battery pack helps to store the energy which is later used to rotate the electric motor. But the real story is that India imports battery cells from other countries like China, Japan, and South Korea.

As per the report of IHS Markit, India imports over 80% of its lithium-ion battery needs. So as no company manufactures the li-ion cells in India, the car companies need to import it from other countries which ultimately increases the cost of EV cars in India. This dependency is a big burden, which the Indian govt will try to sort out in upcoming years by setting the new lithium-ion battery manufacturer plants!

Testing

Building an EV car is not easy, because if something goes wrong then it might harm the driver and passengers and even be a life threat. So to avoid these, companies do several tests on different platforms, in different environments and conditions. They test the EV on different parameters which assures that the EV car is safe to drive on the Indian road and nothing will happen to the battery and electric motor.

So here when several tests are done on a large scale to build a safe car, this increases the budget of EV cars which is why EV cars are costly in India.

Limited production and Low competition

R&D, import of Li-ion batteries, and testing make an EV car costlier, but limited production and low competition in the EV car market are also a big reason for expensive EV cars. As no other brands are available, people only have a few options that they can consider while buying EV cars.

Due to low competition, the price of EV cars is higher as compared to petrol cars. You can’t even bargain because no other brand is offering EV cars less than this (like no EV car below 8 lakh in India). But in a few years when more EV cars are produced, more brands will join the EV market, the high competition will force the companies to reduce the price of EV cars, and then these cars will be in everybody’s reach!

Infrastructure Cost

Many companies also try to create a strong infrastructure for EV cars, so that people can charge their vehicles easily. For example – TATA wants to set up charging stations (powered by Tata) at various places to provide top-class services to the only TATA users having TATA EV cars. Maruti also wants the same and other brands who produce EV cars want their networks. All companies think that if somehow they provide a charging facility, then more customers will prefer their brand which will be a win-win situation as it will benefit in company’s growth.

But here a problem lies… to set up charging stations for their brands at different points every 30 to 60 km, companies need a huge amount of money. So to make this project achievable, the companies set the price of EV cars high and then they use a portion of the profit to build the EV charging stations. In some areas, they also take the help of the local government, so they can build a better infrastructure for EV cars till 2032.

That’s the real story of why EV cars are costly in India. The surge in price is for a few years. As more EV car brands arrive in India, the price of EV cars will be drastically reduced. In addition to that, the Indian government is planning to manufacture the li-ion cells in India which will help to decrease the car battery price and once that happens you might soon expect a feature-packed EV car under 7 Lakh only.

According to the new updates, big brands like JSW-MG, Tesla are ready to invest billions in the Indian EV car market. This will improve the EV infrastructure and in the coming years the price of many electric cars will definitely fall by a large margin and then the middle class will show interest in buying it.

What do you think of this? Do you have any idea why EV cars are expensive in India? If you know, share the fact with us in the comments and don’t forget to share it with others.