Comparing the Initial Expenses of an EV and a Comparable Gasoline/Diesel Model

The expenses associated with owning an electric vehicle (EV) are frequently perceived as a significant hurdle to its widespread adoption. However, it’s crucial to understand just how much pricier EVs are compared to their gasoline or diesel counterparts. This comprehensive guide delves into the upfront costs of possessing an EV in India, shedding light on the Expenses of an EV.

Factors Impacting Expenses of an EV

Several key factors impact the upfront cost differential between EVs and internal combustion engine (ICE) vehicles:

  • Battery Pack – The battery accounts for nearly 30-50% of total EV cost. Larger battery capacity increases range but also price.
  • Import Duties – Most EVs are still imported to India and carry high import duties of 60-100%, depending on vehicle type and import country. Local manufacturing can help reduce costs.
  • Economies of Scale – As EV production scales up, costs are expected to come down significantly due to economies of scale and localized manufacturing.
  • Incentives & Subsidies – State and central government incentives like the FAME scheme help offset some upfront cost differential for EVs. But more incentives are needed.

Cost Comparison by Vehicle Segment

Expenses of an EV
Image Credit: Car India

Here is a cost comparison of popular EV and ICE models available in India today across various vehicle segments:

Entry-Level Hatchbacks

VehiclePrice (on-road)
Tata Tiago EVRs 10 – 12 Lakhs
Tata Tiago ICERs 5 – 7 Lakhs
  • The Tiago EV carries a significant price premium of about 50-70% over the ICE variant.
  • A lower range (250 km) and smaller battery pack avoid extreme price escalation.

Compact Hatchbacks/Sedans

VehiclePrice (on-road)
Tata Tigor EVRs 12 – 14 Lakhs
Hyundai i20 ICERs 7 – 11 Lakhs
  • The Tigor EV commands a 70-100% price premium over a comparable ICE hatchback like the i20.
  • Higher cost due to 200+ km range and larger battery pack.

Mid-size Sedans

VehiclePrice (on-road)
MG ZS EVRs 22 – 24 Lakhs
Hyundai Verna ICERs 10 – 16 Lakhs
  • The MG ZS EV is 40-60% pricier than a petrol/diesel mid-size sedan like the Verna.
  • Verna’s cost advantage shrinks for higher trims.

Compact SUVs

VehiclePrice (on-road)
MG ZS EVRs 22 – 24 Lakhs
Hyundai Creta ICERs 11 – 18 Lakhs
  • Among compact SUVs, the ZS EV again carries a 30-50% premium over popular models like the Creta.
  • A lower EV range and fewer features narrow the price gap somewhat.

Mid-size Luxury SUVs

VehiclePrice (on-road)
Jaguar I-PaceRs 1.5 – 2 Crores
Audi e-tron 55 QuattroRs 1 – 1.2 Crores
Audi Q5 Premium Plus ICERs 65 – 80 Lakhs
  • Luxury EVs have a lower cost differential of 25-50% compared to equivalent ICE models.
  • Lower relative battery costs at a higher pricing spectrum.

Cost Breakdown by Components

Here’s a percentage cost breakdown of the key components that make up an EV’s upfront price:

  • Battery Pack – 30-50%
  • Electric Motor & Controller – 15-20%
  • Charging Equipment & Electronics – 10-15%
  • Body, Interiors & Other Parts – 15-25%
  • Assembly & Manufacturing – 5-10%

The battery remains the single largest component influencing EV pricing. But over time, declining battery costs will help lower EV sticker prices.

Read Also: EV Battery Replacement Costs in India – Out-of-Warranty Analysis

Future EV Price Trajectory in India

Expenses of an EV
Image Credit: ACKO Drive

While EVs currently cost a significant premium over petrol/diesel vehicles, their upfront pricing is expected to reach parity around 2025-2030, driven by:

  • Rapid decline in lithium-ion battery pack prices.
  • Economies of scale as production volumes increase.
  • Emergence of locally manufactured EV components instead of imports.
  • Evolving government incentives and favorable policies for EVs.
  • Innovative business models that spread out upfront costs like battery swapping, leasing, etc..

Some EV startups like Matter and Omega Seiki have set targets to launch EVs at parity with ICE vehicles in the next 2-3 years in India.

Key Takeaways – EV vs. ICE Cost Comparison

To summarize, here are the key highlights from the EV vs. ICE cost analysis:

  • 2X-3X – EVs today cost 2-3 times more than equivalent ICE models in most vehicle segments in India.
  • 30-50% – The battery pack alone accounts for 30-50% of the total vehicle cost for an EV.
  • 2025-2030 – EV prices are expected to reach parity with ICE around 2025-30 in India owing to lower battery prices, local manufacturing, etc.
  • Higher Range – Longer-range EVs carry a bigger price premium due to larger battery packs. The lower range brings EVs closer to ICE costs.
  • Luxury First – Mass market affordable EVs will take longer. Luxury segments will achieve price parity first.

So while the sticker shock of EVs is quite big currently, sustained policy support and technological progress will help make them cost-competitive in the coming decade. Electrification is the future!

Latest Developments in India’s EV Segment

Here are some recent news updates regarding the EV landscape in India:

  • Lower GST – GST on EVs was reduced from 12% to 5% in 2019 and on chargers from 18% to 5% to boost affordability.
  • FAME 2 Extended – The second phase of the FAME scheme was extended to 2024 with a Rs 10,000 crore budget to subsidize 7000 e-buses and 5 lakh EVs.
  • New EV Policies – Delhi, Maharashtra, and Gujarat have draft EV policies focusing on charging infra, purchase incentives, EV fleets, etc.
  • ** Battery Swapping** – Battery swapping policy in the finalization stage by NITI Aayog to establish standards and interoperability.
  • Delivery Fleets – E-commerce and last-mile delivery firms like Amazon, Flipkart, and BigBasket plan large EV fleets over the next 2-3 years. Will drive scale.
  • Charging Standards – India has specified charging standards as Bharat AC and DC-001 for EV supply equipment for nationwide interoperability.
  • Rising Investment – Large investment deals in Ola Electric, Ather, OBEN EV, etc. EV startups raised > $1 billion in 2021.
  • New Launches – Tata Motors unveiled the Avinya concept for launch by 2025. Ola Electric is gearing up to launch an electric car in 2024. Exciting EV pipeline.

The policy and product momentum in India’s EV shift is accelerating. With conducive measures and rapid technological progress, a promising electric future awaits the Indian automotive industry.

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