India Could Save $125 Billion Annually by 2050 Through EV Transition

Synopsis

India has the potential to save as much as USD 125 billion every year by 2050 through a swift transition to electric vehicles. The savings from reduced import costs significantly eclipse battery costs. Accelerating the shift towards electrification mitigates the impact of global crude oil price volatility and boosts self-sufficiency.

New Delhi: India can reduce its annual combined oil and battery import bill by up to USD 125 billion by 2050 if EV adoption accelerates across all vehicle segments, according to a new study.

"The money India can save by importing less petrol and diesel outweighs the cost of importing batteries by an order of magnitude," it said.

The study, "India's EV transition: Impact of electric vehicle battery demand on import payments from 2024 to 2050", was released on Wednesday by the International Council on Clean Transportation (ICCT), a nonprofit research organisation.

In a statement, Amit Bhatt, ICCT's India managing director, said, "The faster India electrifies, the less exposed it is to global crude price shocks, and the stronger its case for 'Aatmanirbhar Bharat'."

"Localising battery manufacturing adds real value on top, but the pace of the transition is what protects India first," he added.

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The study models India's battery demand across on-road segments including two-wheelers, three-wheelers, passenger cars, light commercial vehicles, buses and trucks, from 2024 to 2050.

It tests three EV adoption pathways -- baseline, momentum and ambitious -- against four scenarios for how much of India's battery supply is made at home.

These scenarios are no localisation, slow localisation, announced localisation, and high localisation, representing varying levels of domestic cell manufacturing capacity, based on India's announced manufacturing capacity targets, the study said.

In every case, battery demand rises steeply after 2030, reaching roughly 340 GWh under the baseline scenario and 573 GWh under the momentum and ambitious scenarios by 2050, according to the study.

Even if India continues to import batteries, faster EV adoption could reduce vehicle-related imports by around 61 per cent, from USD 153 billion to USD 59 billion, it said.

Namita Singh, researcher and co-author of the study, said in a statement, "Every electric vehicle India puts on the road reduces its dependence on imported oil, whether the batteries are manufactured domestically or imported."

"Accelerated EV adoption alone could cut India's road transport import bill by 61 per cent by 2050. Coupling rapid manufacturing with domestic battery manufacturing could raise those savings to 82 per cent, equivalent to about USD 125 billion annually," she added.