Page 24 - Insurance Times May 2023

Graph 1: Predication of India's Electric Vehicle Market Size from consistent decrease in the
cost of lithium-ion batteries
2018 to 2040 in USD Billion
has a positive impact on
market growth. Battery
cost reduction is a critical
driver for EV adoption, as it
lowers the total cost of
operation (TCO) parity and
the high upfront costs of
EVs in India. Battery costs
have dropped by around
85% in the last decade,
resulting in greater EV
adoption across all vehicle
categories. Furthermore,
the battery cost USD 1200
per kWh in 2010 and has
dropped dramatically to
Source:https://www.fortunebusinessinsights.com/india-electric-vehicle-market-106623
USD 130-150 per kWh in
2021 due to scale in operations, changes in cell chemistries,
Rising fuel prices, environmental concerns, low maintenance
and a variety of other factors.
costs, and government incentives are driving electric vehicle
adoption in India. Because of the advanced technologies and
Restraining Factors
components used in EVs, appropriate EV insurance is critical.
Electric vehicle penetration in India remains low when
Motor insurance products available from insurers include
compared to other countries. Consumer awareness is also
standalone third-party cover, own-damage cover,
extremely low. As a result, recent fire accidents in the
comprehensive cover, and bundled long-term cover for new
electric two-wheelers of leading players such as Ola Electric,
vehicles. Pay As You Drive (PAYD) and Pay How You Drive
Pure EV, and Okinawa have raised concerns about the safety
(PHYD) add-ons can help customers save money on
of using these vehicles. The Indian government also
premiums. With low operating costs and environmental
investigated the EV models from these leading brands to
friendliness, EVs are expected to be more affordable in the
determine the root cause and those responsible for these
long run than gasoline and diesel vehicles.
safety flaws. Furthermore, one of the major barriers to the
region's adoption of electric vehicles is India's lack of a well-
Driving Factors of EV
established EV ecosystem.
In India, rising fossil fuel prices are one of the major factors
expected to drive demand for electric vehicles. Vehicles Market Segmentation:
powered by fossil fuels are less expensive to buy than EVs. The market is divided into four-wheelers, three-wheelers,
Their operating costs, however, are high due to rising petrol and two-wheelers based on platform. During the forecast
and diesel prices. In comparison, the operating costs of period, the four-vehicle market is expected to gain a
electric vehicles are significantly lower than those of fossil- significant share of the India electric vehicle market. The
fuel-powered vehicles. As a result, shifting consumer rapid adoption of four-wheel drive vehicles throughout the
preferences towards electric vehicles in response to rising region is expected to fuel the industry's growth due to the
fossil fuel prices is expected to boost market growth over
the forecast period.

Furthermore, the government's emphasis on combating
climate change by tightening emission control standards and
implementing scrapping policies for conventional vehicles is
expected to drive market growth in the coming years.

Since the Indian automotive market is price-sensitive, a

22 May 2023 The Insurance Times