Electric vehicles (EVs) are becoming more accessible as government subsidies and the ongoing decline in battery prices reduce their cost, according to a new analysis by Axis Securities. However, the upfront cost of EVs still exceeds that of traditional internal combustion engine (ICE) vehicles.
“EVs have higher upfront costs than ICE vehicles but are becoming more affordable with subsidies and falling battery prices. Lower running costs over time make EVs more economical in the long run,” the report noted, underlining the gradual shift in cost dynamics.
The analysis highlighted that while the initial investment for an EV might seem steep, lower operational expenses—such as reduced electricity costs and lower maintenance—make them a more cost-effective choice in the long term.
Improving battery technology
In addition to lower operational costs, the report highlighted improvements in battery technology, which are reducing range anxiety, a common concern among potential EV buyers. With advancements in battery efficiency, EVs are becoming more reliable for longer journeys, expanding their appeal.
Although ICE vehicles benefit from a well-established fuel infrastructure, the network of EV charging stations is expanding at a rapid pace. Both government initiatives and private investments are driving this expansion, making it easier for EV owners to find charging points across the country.
Resale value: catching up
The resale value of ICE vehicles remains one of their key advantages, according to the report, as they enjoy a stable and mature secondary market. However, EVs are beginning to catch up in this regard, thanks to advancements in battery technology, which is improving the long-term value of electric vehicles.
“The improvements in the resale value will stabilise EVs’ long-term value in the market,” the report stated, noting that the growing acceptance of EVs in the resale market is likely to boost their appeal further.
Challenges remain in India’s two-wheeler market
A separate report by Bernstein shed light on the financial challenges facing India’s EV two-wheeler market, which generates approximately USD 1.3 billion in annual revenues but incurs EBIT losses of USD 300-400 million without incentives. Despite this, government policies, such as the reduction in GST for EVs, are helping to narrow the price gap between electric and ICE vehicles.
The Bernstein report emphasized that the EV industry remains heavily dependent on government support, including incentives and subsidies, to maintain its competitiveness. To break the dominance of traditional ICE vehicles, the EV sector will need large-scale operations, cost reductions, and sustained focus on innovation.
Government’s push for electric mobility
The Indian government continues to drive the EV sector forward with substantial support. The Union Cabinet recently approved the ‘PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme,’ initiated by the Ministry of Heavy Industries (MHI). This scheme, designed to promote electric mobility, comes with a budgetary outlay of Rs 10,900 crore over two years.
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