Automotive & Assembly Practice

Consumers are driving

the transition to electric
cars in India
As the transition to electric cars gains momentum in India, new
consumer needs are emerging related to product features, charging,
channel preferences, flexible ownership models, and more.

This article is a collaborative effort by Tushar Goswamy, Alexander Grausam, Bhavesh Mittal, Timo
Möller, Felix Rupalla, and Prabhmaan Thapar, representing views from McKinsey’s Automotive &
Assembly Practice and the McKinsey Center for Future Mobility.

September 2023
 India is poised to embrace a future of electric
vehicles (EVs): 70 percent of tier-one Indian car
About the McKinsey Center for
consumers state that they’re willing to consider an
electric car for their next vehicle, as compared to Future Mobility
the record-high global average of 52 percent. Even
These insights were developed by the
though the Indian internal-combustion engine (ICE)
McKinsey Center for Future Mobility
vehicle market has seen an increase in recent years,1
(MCFM). Since 2011, the MCFM has worked
the rapid transition to electrification signifies a
with stakeholders across the mobility
decisive inflection point for the country. Driven by
ecosystem by providing independent
a shift in global climate policies, central and state
and integrated evidence about possible
governments have introduced initiatives such as
future-mobility scenarios. With our unique,
the Faster Adoption and Manufacturing of Electric
bottom-up modeling approach, our
Vehicles (FAME) scheme to speed up the adoption
insights enable an end-to-end analytics
of EVs. In addition, several cities have introduced
journey through the future of mobility—
access regulations for ICE vehicles to reduce air
from consumer needs to modal mix across
pollution and improve traffic conditions.
urban/rural areas, sales, value pools, and
lifecycle sustainability. Find out more
At the same time, EVs have become increasingly
about the McKinsey Center for Future
accessible. Incumbent car manufacturers
Mobility on McKinsey.com.
have announced ambitious product-portfolio
electrification targets. Newcomers have launched

models specifically designed for India’s urban

Methodology environments. And the total cost of ownership
for EVs, which is historically an obstacle for EV
This article is informed by insights purchasers, achieved parity with ICE vehicles. As a
from our online India Mobility Consumer result, EV market penetration is projected to grow
Survey conducted in December 2022. We to 10 to 15 percent by 2030,2 creating a significant
surveyed about 1,200 participants across opportunity for OEMs, financial institutions, grid
income ranges, household compositions, operators, and other stakeholders.
and regions in India with varying mobility
patterns. This India-specific perspective To better understand consumer sentiment about
complements our regular McKinsey vehicle electrification in India, we surveyed people
Mobility Consumer Pulse Survey, a global across income levels and spanning regions in India
survey with more than 50,000 consumer (see sidebar, “Methodology”). Their responses
data points to discern future mobility reveal both an appetite for and concerns regarding
consumer trends, shifting preferences, electric vehicles, including the importance of
and the evolution of consumer segments sustainability, charging infrastructure, and the
over time. evolving purchase journey in the online space.

1
Brajesh Chhibber and Nitesh Gupta, “The Indian automotive industry: From resilience to resurgence?,” McKinsey, March 3, 2021.
2
Estimate from McKinsey Electrification Model as of July 2023. Does not include impact of potential change in FAME regulations.

2 Consumers are driving the transition to electric cars in India

Exhibit 1

Most Indian consumers say the next car they purchase will be electric.

Powertrain considerations for next car, share of Top 3 benefits of BEVs1 or PHEVs,2 share of
survey respondents, % survey respondents who ranked feature among
top 3, %
India Global average Better for the 39
environment

Next car is BEV1 48 34 Ability to reduce

28
emissions

Lower cost of
26
ownership
Next car is PHEV 2
21 23
Decreased
26
engine noise

Convenience of
One more new ICE3 9 10 22
charging

Cutting-edge
21
technology
One more used ICE3 17 13
Driving
20
performance

Design, look,
19
A couple more ICE3 4 7 and feel

Stability of 16
resale value

Don’t want to switch 2 11

Cleaner exteriors 15

Note: Figures may not sum to 100%, because of rounding.

1
Battery electric vehicle.
2
Plug-in hybrid electric vehicle.
3
Internal-combustion engine.
Source: McKinsey India Mobility Consumer Survey, December 2022 (n = 1,199)

McKinsey & Company

Consumers are largely on board align closely with our research on electric two-
with EVs because sustainability is wheelers, which showed that 86 percent of
increasingly important consumers would consider buying an EV compared
Consumer sentiment suggests the transition to to 69 percent who would consider an ICE vehicle. A
electric cars will gain momentum. The vast majority number of factors are contributing to this appetite
of people are eyeing EVs for their next car purchase, for EVs, with potential purchasers noting the impact
with a clear preference for full battery electric on the environment (67 percent), lower total cost of
vehicles (49 percent) over plug-in hybrid electric ownership (26 percent), and reduced engine noise
vehicles (21 percent) (Exhibit 1). These preferences (26 percent) as the biggest benefits of driving an EV.

Consumers are driving the transition to electric cars in India 3

 Exhibit 2

For their next car purchase, consumers are considering safety, brand, and total
cost of ownership, followed by sustainability.

Key purchase criteria for next private car, share of car considerers, %

Technology-enabled safety 27

Vehicle brand 26

Total cost of ownership 25

Purchase price 25

Sustainability 24

Driving performance or acceleration 21

Cutting-edge technology in vehicle 21

Battery safety 20

Battery life 20

Charging speed 19

Source: McKinsey India Mobility Consumer Survey, December 2022 (n = 1,199)

McKinsey & Company

Indeed, an overall concern for sustainability is Sustainability is among the top five criteria people
influencing Indian consumers’ desire for EVs, factor in when considering a car, along with safety,
with sustainability being the number one priority brand, and costs (Exhibit 2). The desire for zero-
in car-buying and mobility-usage habits. In fact, carbon vehicles is also evident in the dominant two-
sustainability is increasingly influencing consumer wheeler market, in which this preference was one of
decisions across the board in India: 75 percent the top three purchase criteria.
of Indians are starting to change (or have already
changed) their behavior and consumption patterns
based on sustainability considerations. Of these Convenient charging points
changes, engaging with and becoming more loyal and long-term test-drives will
to sustainable brands (27 percent), positively accelerate adoption
advocating for sustainable products and services Alongside all this momentum for sustainable
(23 percent), and trying sustainable products and mobility, there emerge real concerns that could
services more often (20 percent) are the most influence uptake, including battery life and safety,
common. purchase price, charging time, and reliability of

4 Consumers are driving the transition to electric cars in India

Exhibit 3

Charging infrastructure readiness is perceived to be low, and speed, cost, and

safety are paramount to choosing a charge point.

Perceived readiness of electric-vehicle charging Key decision factors for choosing a

infrastructure, share of car considerers, % charge point, share of car considerers, %

Along highways In other major In your close Charging speed 49

and main roads cities in your proximity or
in your area country nearby area
Charging data 41
We are still missing
a significant Safety of charging
amount of 23 23 38 location 28
charge points
Charger service
25
reliability
We have just
enough charge Proximity to
22
points for today’s destination
demand but lack 29 27 18
infrastructure for Charge point
20
future demand operator brand

Ability to reserve in 20
We are getting advance
close to having Already having
enough charge 25 32 22 downloaded app or 15
points account set up
Established partner 15
of OEM
We are well set up Payment options 14
in terms of charge 23 32 23
points
Fast technical
14
support

Note: Figures may not sum to 100%, because of rounding.

Source: McKinsey India Mobility Consumer Survey, December 2022 (n = 1,199)

McKinsey & Company

technology. Better availability of charging points more accessible. However, only 55 percent of
is one of the biggest factors influencing the shift consumers have access to home charging, while
toward electric mobility. Perceived charging another 30 percent would be able to upgrade their
infrastructure readiness is low: more than 75 home setup accordingly. But even though Indian
percent of all surveyed consumers feel that India consumers have limited access to home charging,
is not yet well set up in terms of charge points this will likely not hinder EV adoption. Two-thirds
(Exhibit 3). of Indian consumers would buy an EV even if they
could not charge at home. But similar to what we
Indian consumers show almost equal affinity for found in our research on electric two-wheelers, 38
public and home charging (58 percent and 42 percent of consumers feel their nearby areas lack
percent, respectively) despite appreciating the a sufficient network of charging infrastructure.
latter as being cheaper, more convenient, and Hence, investing in both public and home charging

Consumers are driving the transition to electric cars in India 5

 is critical for further EV adoption. The biggest Other major factors that could lead to higher
factors influencing where people choose to charge EV adoption are vehicle safety improvements
in public are charging speed (49 percent) and costs and providing better servicing infrastructure.
(41 percent), followed by the safety of the location Furthermore, an increase in fuel prices and a better
(28 percent). In fact, most people are willing to pay understanding of the total cost of ownership of EVs
10 to 20 percent more for the convenience of fast might nudge more customers toward EVs.
charging.

Another significant factor influencing potential The transition to electric cars will
EV purchasers was the test drive experience. Of change the purchase journey
the people who are currently skeptical about As the transition to EVs unfolds, the landscape for
purchasing an EV, 24 percent said the test drive buying and selling cars is changing dramatically.
experience presents an important tipping point Indian consumers are open to buying cars online
in the overall purchase journey. Thus, OEMs and want to interact with brands through a simplified,
can consider implementing long-term test rides digital process that provides more flexibility and
(over the course of seven to ten days) with the convenience. The majority of Indian customers are
convenience of at-home services to eliminate ready to perform most of their car purchase journey
customer anxiety while adopting new products digitally. More than 70 percent of consumers are
and technology. starting their journey online, and about 40 percent
of consumers are willing to make purchases online.

Web <2023>
Exhibit 4 of Cars in India>
<Electrification
Exhibit <4> of <4>

Customers are beginning to prefer digital channels, and they expect OEMs to
engage across all major touchpoints of the decision journey.

Channel preferences for each major touchpoint across the decision journey,
share of car considerers, %

Searching Configuring Scheduling Negotiating Scheduling

Ordering
info vehicle test ride and clarifying delivery

App 22 28 33 28 33 29
Preferred
channel Website 62 53 43 48 45 40

Direct 15 19 24 23 22 31

47 51 51 59 52
Preferred OEM 70
contact point
53 49 49 41 48
Dealer 30

Note: Figures may not sum to 100%, because of rounding.

Source: McKinsey India Mobility Consumer Survey, December 2022 (n = 1,199)

McKinsey & Company

6 Consumers are driving the transition to electric cars in India

 However, about 90 percent of the same consumers they work to meet consumers where they are in their
Find more content like this on the
need a physical touchpoint with an OEM or dealer. journey toward EVs.
McKinsey Insights App
This applies to highly individual exchanges such as
test-drives, services, answering questions about the In many cases, electric cars could become an
vehicle, or negotiating best deals. important pocket of growth for car manufacturers.
The contribution of electric cars to overall revenues
Across each major touchpoint of the purchasing may become more significant in the future as
journey, people who prefer to engage via websites consumer pull accelerates and governmental
and apps show a strong preference for engaging measures become even more favorable. With a
with OEMs rather than a dealer or third party fast-growing market open to innovations in car
Scan • Download • Personalize
(Exhibit 4). This indicates an emergence of hybrid purchasing (for example, via online channels) and
direct-to-consumer models, with car dealers usage (for example, fully leased), electric cars may
continuing to play a pivotal (but evolved) role in the provide an entry opportunity for new players. At
overall purchase and post-purchase journey. the same time, car dealers may need to adjust
their sales and service offerings to accommodate
Flexible ownership options are also becoming the growing demand for electric cars, including
more popular with Indian consumers. While most expanding their technical knowledge and digital
consumers (about 79 percent) still prefer an outright capabilities to deliver omnichannel experiences.
purchase for their next car, they are gradually opting Supplier stakeholders such as grid operators will
for more-flexible ownership options such as car most likely experience an increased demand for
leasing, subscriptions, or pay-per-use models. electricity and may need to upgrade and expand
the existing infrastructure and integrate new
Shifting ownership preferences, stemming from a technologies to optimize the use of the electrical
desire to access higher-value assets and have more grid. And cities will be crucial players in shaping
flexibility and convenience, are opening new market the EV transition, providing the infrastructural
opportunities for flexible ownership options, such as conditions for charging needs and implementing
leasing. Our global survey revealed that consumers effective policy measures.
in other geographies are willing to switch brands for
flexible vehicle purchase, indicating that the time is
ripe for market players to adapt.
Indeed, the shift to electric cars in India has
implications far beyond only OEMs and could be
Consumer appetite for EVs has an integral part of progress toward a more
implications for mobility stakeholders sustainable India.
These trends raise important considerations for
different stakeholders in the mobility ecosystem as

Tushar Goswamy is a consultant in McKinsey’s Chennai office, Alexander Grausam is a consultant in McKinsey’s Munich
office, Bhavesh Mittal is an associate partner in the Bengaluru office, Timo Möller is a partner in the Cologne office,
Felix Rupalla is an associate partner in the Stuttgart office, and Prabhmaan Thapar is a consultant in the Delhi office.

The authors wish to thank Jaidit Brar and Nitesh Gupta for their contributions to this article.

Designed by McKinsey Global Publishing

Copyright © 2023 McKinsey & Company. All rights reserved.

Consumers are driving the transition to electric cars in India 7