Maruti Suzuki India Limited (MSIL) will not enter the market for sub Rs 10-lakh EVs as it is less economical than electric SUVs.

An EV scores over a petrol or diesel model (internal combustion engines or ICE) because of its low running cost. However, their sticker prices are high on account of the high battery costs.

“Research shows that consumers who prefer EVs are primarily looking for lower costs of running that EVs provide, besides environmental concerns. While EVs certainly have a lower cost of running, their adoption is slow because of the high cost of acquisition and the lack of charging infrastructure, which results in consumer range anxiety," said Shashank Srivastava, senior executive officer, MSIL.

Car buyers look into the total cost ownership of a car — the sticker price and the running cost — which over the lifetime of the car will be the same if not lower for EVs.

However, the adoption is slow because of the high sticker price compared with ICE models.

“Battery costs are an important element in EV costing as they constitute almost 45 per cent of the overall cost. The battery costs were expected to come down to much lower levels but that has not yet happened in the last two years as lithium prices have increased. Moreover in India, localisation of EV batteries is limited and this localisation is essential to bring down the costs of EVs," he saids.

EV adoption in the country will depend on the total cost of ownership (TCO) parity with ICE vehicles.

"These TCO estimations give us a clear indication of which segments will appeal to those consumers. The duration of TCO parity for EVs will be determined by the ratio of acquisition costs between them and the corresponding ICE vehicles. The higher this ratio, the longer it will take for TCO parity. For mid-SUVs, this ratio is about 1.4-1.45 but for hatches, it is around 1.55-1.7. That is the reason why it is expected that SUV EVs have a better chance at earlier adoption. Electric hatches and sedan adoption will happen later."

Maruti Suzuki will be introducing its first EV — the mid SUV eVX — in the next financial year.

However, the company expects EV sales to be 1 million in an overall 6 million market in 2030.

"It is increasingly clear, therefore, that the overall emission targets for the industry will be met by a bouquet of technologies rather than purely by EVs. These include CNG, flex fuel, bio gas and hybrids.

"It is estimated that of our portfolio by power train 15 per cent will be EVs by 2030, 25 per cent will be hybrids and the rest a mixture of CNG, bio gas, flex fuel and gasoline. We have exited from diesel a few years back," said Srivastava.