India needs to push the pedal harder if it wants to become a major player in Asian electric vehicles (EV) and supply chains.

According to a study by S&P Global Ratings, EV penetration (EV sales as a percentage of total passenger car sales, including passenger cars and light commercial vehicles) in India was just 1.1% in calendar year 2022 compared to the Asian average. 17.3%.

Countries covered in the region include China, Japan, South Korea, India, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, the Greater China region and Pakistan.

While China is at the top with EV penetration at 27.1%, South Korea has already reached 10.3% after a slow start. The average penetration range of electric vehicles in countries such as Indonesia, Vietnam, Malaysia, Philippines and Thailand ranges from 0.1% to 2.5%. Among them, S&P reports that Thailand has the highest rate of electrification.

Electric vehicle penetration in Japan is 2.2%, but this is because, unlike India, the Japanese government has chosen to support various types of green technologies such as hybrids, plug-in hybrids and fuel cell vehicles, in addition to ion-powered vehicles. lithium batteries. batteries. Thus, the net EV penetration is muted. In addition, globally, EV penetration was found to be 13.3%.

The Government of India predicts that EV penetration will reach 30% by 2030. But at present, 90% of electric vehicles in the country are two- and three-wheelers. Even if they are added (with the exception of electric rickshaws, which do not use lithium-ion batteries), the penetration will be about 4.5%.

Asian countries dominate the supply chain, with 98% of battery cells coming from the region. S&P predicts it will continue to control 90% of this market even into 2025. But India still lags far behind other countries in the region in battery cell production.

Major players in the battery cell market include China’s CATL and South Korean giant LG EnSol, which together control almost half of the world’s supply. Another player in this market is the Japanese company Panasonic, which supplies Tesla products.

While India still imports all of the needed items, the Production Related Incentive (PLI) scheme could make a difference. According to the scheme, over the next two years, it is planned to build a 50 gigawatt battery with advanced chemical elements.

When it comes to critical raw materials like lithium, which plays a key role in battery production, India has good news. The recently discovered 5.9 million tons of lithium in the Union Territories of Jammu and Kashmir will soon be auctioned off. Lithium has also been discovered in Rajasthan.

Indonesia, the world’s largest nickel producer, is emerging as a key player in the battery nickel market (a key raw material for battery production) in Asia. $30 billion is being invested in the extraction and processing of nickel in the country.

In terms of traditional internal combustion engine (ICE) automotive companies in Asia that have moved into the EV market, Tatas are in seventh place, with around 6% of their total sales (ICE and EV) coming from EVs. The company has announced that by 2026, electric vehicles will account for up to 20% of total sales.

This is far better than Japanese automakers such as Nissan, Honda and Toyota, whose EV penetration rate was only 1-3% in 2022. Chinese automakers Zhejiang Geely, Geely Auto and Dongfeng have EV penetration ranging from 14% to over 26%.