Fuelling Electric Vehicles Growth: Factors that Matter in India’s Electric Vehicles Growth Story

The recent impetus to the electric vehicle (EV) policies at the national and sub-national levels with the medium to long-term objective of reducing greenhouse gas emissions from vehicle traffic motivates an assessment of the key drivers of EVs in India. The sale of EVs especially two-wheelers is rising due to the push by government policies, reduction in upfront costs and increased awareness about EVs. However, the sale of electric cars has not picked up significantly and is uneven across states. The study finds a strong correlation between the use of electric cars in states and the availability of public charging stations. The empirical analysis finds that the availability of public charging infrastructure and the price differentials between electric cars and comparable internal combustion engine cars are significantly associated with the demand for cars across states. A focused and liberal policy assumes importance to stimulate the demand for EVs and to harness its manifold environmental and financial gains.

JEL Classifications: Q42, Q48, Q49