batteries. For commercial vehicles, which have much larger batteries, slow chargers are not suitable as they will
take too long to charge, impacting their commercial viability due to reduced utilization.

PMP

While the FAME scheme is aimed at boosting the EV ecosystem by way of subsidy as incentives for buyers and
for setting up charging infrastructure, it also seeks to boost the manufacture of products required to support the
EV ecosystem. Initially basic customs duty and GST on EVs, their assemblies/ sub-assemblies and parts were
reduced and rationalized. As volume of EVs has increased and cost is starting to come down, the government has
introduced a phased manufacturing roadmap to provide further impetus to the EV ecosystem and promote
indigenous development of such vehicles. Aimed at increasing value addition and building capacity within the
country, the roadmap has a graded duty structure for specific parts. The duty varies from 0% to 25%. For instance,
parts such as motors, inverters and power control units used in the manufacture of EVs attract 0% basic customs
duty (BCD) while battery cells and packs attract 5%. From January 2019, basic customs duty (BCD) on completely
built EVs has been 25%. BCD on the 0% category is proposed to be increased to 15% by April 2021. The duty on
battery cells and packs would increase from 5% to 10-15% based on application. Meanwhile, the duty on
completely built vehicles will be increased to 50% in the same period. The proposed changes could vary from
time to time and be notified through official channels. As per the latest notification in September 2020, the
effective date for localization of multiple parts across segments have been extended to 1* April 2021. For
commercial vehicles, the buses segment has been provided extension for all parts except body panels and various
lighting fixtures till 1 April 2021.

EV Penetration

The current penetration of electric vehicles in India is negligible at <1% of annual sales. The focus on the FAME-
II scheme is on promoting eco-friendly vehicles including hybrid and electric vehicles. Considering this, over the
next five years, CRISIL Research expects electric vehicle adoption in three-wheeler and public transport buses to
pick up first, largely driven by government subsidies. EV penetration in three-wheelers will also be supported by
favourable cost economics for lead acid-based electric vehicles vis-a-vis internal combustion vehicles. In the
personal mobility segment (two-wheelers and passenger vehicles), EV penetration is not expected to pick up
significantly over the next five years on account of lack of clarity on technology, charging infrastructure and
higher cost of ownership. Within two-wheelers, EV penetration in scooters is expected to pick up first due to
fewer model launches in the motorcycles segment.

   

Avtar its EV penetration
FY 20 FY 25P
Passenger vehicle 0.1% (~3,400) 3-5% (1,35,000)
Two-wheeler 0.9% (~1,52,000) 8-12% (20,35,000)
E-auto 0.01% (~700) 43-48% (3,00,000)
LCVA 20 1-3% (10,000)
E-buses’ ~440 2-4% (2,650)

NOTE: Figures in brackets refers to sales and % refers to EV penetration
A EV penetration projected till FY24
Source: FAME, CRISIL Research estimate

EV Penetration — Commercial Vehicles
Total cost of ownership

A comparison of total cost of ownership of various types of commercial vehicles will provide a view as to how
much a vehicle costs to own and operate over the period. Commercial operation of any vehicle will be successful
only if the cost of operating it is below the revenue earning. A vehicle with a significantly higher cost of operation
will not be viable due to competition from other vehicle categories and varying powertrains.

TCO over 4 year period at FY20 and FY24 prices for various sub-segments:
LCV (2T GVW)

ICV (11T GVW)

MCV bus (16T GVW)

HCV (40T GVW)

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