The Role of Insurance in EV Adoption in India

Electric vehicles (EVs) are gaining momentum in India, as more and more consumers, manufacturers and policymakers are embracing the benefits of clean and green mobility. EVs offer lower operating costs, reduced emissions, improved air quality and energy security for the country. A survey on EVs predict that the market share of electric vehicle in India will witness a CAGR of a whopping 49% between 2022 and 2030.

Evidently, EVs are on the rise in India and offer many benefits such as lower emissions, lower operating costs and better performance. However, it is necessary to address the challenges that are hindering their adoption, including the availability and affordability of car insurance plans for EVs. A third party car insurance policy is mandatory for all vehicles in India. However, in general car insurance plans, car insurance for EVs are yet not widely available or standardised in India.

Major Challenges that Hinder the Growth of Electric Vehicles in India

Note that there are three different types of car insurance policy, namely third-party liability coverage, standalone own damage policy and comprehensive policy. Since third party car insurance is mandatory, it is easily available for EVs as well. However, finding and choosing an own damage cover or a comprehensive cover for EV from a wide range of options, is still a major roadblock. This is because of the slow penetration of EV in the Indian vehicle market.

Given below are the major challenges surrounding EV adoption in Indian –

  • Lack of resources: One of the biggest challenges facing the electric vehicle industry in India is the lack of resources. India is still developing its domestic manufacturing capabilities for electric vehicles, which means importing of many necessary parts and components. The electric vehicles are expensive than their petrol or diesel counterparts, which can be a major deterrent for potential buyers.
  • Lack of infrastructure: Another major challenge for EV adoption in India is the lack of adequate and accessible charging infrastructure. According to a report by NITI Aayog, India needs about 2.9 million public charging points by 2030 to meet the demand for EVs3. However, as of March 2020, there were only 1,800 public charging stations in India, compared to over 68,000 petrol pumps. Although some charging stations are available in major cities, the number of charging stations is still quite small compared to the number of petrol and diesel pump stations.
  • Limited options available: Another challenge of the electric vehicle industry in India is the limited options available. Although several electric vehicle models are available in the country, the range is still quite limited compared to other countries. It can make it difficult for potential buyers to find a vehicle that meets their needs and preferences.
  • The initial cost of ownership: One of India’s biggest barriers to EV adoption is the high upfront cost of EVs and batteries. EVs are typically 30% to 40% more expensive than their conventional counterparts, mainly due to the cost of lithium-ion batteries, which account for 40% to 50% of the total cost of an EV2. The lack of domestic battery manufacturing also makes India dependent on imports, which adds to the cost and exposes the country to geopolitical risks. Although electric vehicle costs are expected to decrease over time, the high initial cost is still a major barrier to adoption.
  • Battery cost and replacement: The cost of batteries and their replacement is another major challenge facing the electric vehicle industry in India. Although batteries have decreased over time, they are still quite expensive compared to other vehicle components. In addition, the cost of replacing a battery can be quite high, which can be a major deterrent for potential buyers.

Why Car Insurance is Crucial for the Adoption of Electric Vehicles in India

Let us take a closer look at why the availability of different types of car insurance policy for EV is crucial for adopting electric vehicles in India:

  • Charging infrastructure: One of the key reasons why car insurance plans are important for electric vehicle owners in India is protection against charging infrastructure damage. As the charging infrastructure for electric vehicles is still developing in the country, availability of the same could be an issue, as these charging stations are more prone to accidents or damage. If your electric vehicle is damaged while charging, your car insurance policy can cover the repairs.
  • Coverage for high repair costs: Robust EV car insurance plan is crucial for high repair costs. While EVs require less maintenance than petrol or diesel vehicles, repairs can still be quite expensive due to the high cost of replacement parts and the specialized knowledge required to work on electric vehicles. By having a comprehensive car insurance plan, you can ensure that you are covered in the event of unexpected repairs or damage.
  • Protection for expensive add-ons: EVs often come with a range of add-ons and features that can be quite expensive. For example, some electric vehicles may have advanced safety features, such as collision avoidance systems, adaptive cruise control, and lane departure warning systems. While these features can be important for safety, they can also significantly add to the vehicle’s cost. By having car insurance, you can ensure that you are protected if these expensive add-ons are damaged or stolen.
  • Protection against theft: Electric vehicles can be a target for theft due to their high value and advanced technology. By having car insurance, you can ensure that you are protected if your electric vehicle is stolen or damaged due to a theft-related incident. Read more “add your site” “list your business in the” “free and paid submission to the” statistics

With the demand for upcoming electric cars in India is on the rise, car insurance providers are developing bespoke insurance options that primarily cater to these variants. The price of EV car insurance plan is not the same as for traditional cars. The premium for different types of car insurance policy for EV depends on how much the car costs, how much the parts cost, how long the battery lasts, and how hard it is to find mechanics to fix them. But some things can help you lower the insurance premiums or prevent losses, like putting devices that stop thieves and paying some amount of money before the insurance pays.

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