Electric vehicles (EVs) would reach upfront price parity with internal combustion engine ( ICE) vehicles only after 2030, a latest report by Bloomberg New Energy Finance (BNEF) said.

There are now more than five million EVs on roads around the world, but only a little more than 3,000 such four-wheelers were in India at the end of 2018, the report noted.

“However, the latest budget announcements on EVs — which allowed import duty exemptions, reduced taxes and extended support for corporate procurement — will help reduce the price differential,” Ali Izadi Najafabadi, head, intelligent mobility, BNEF, said. The price of EVs is seen to match that of ICE vehicles as early as 2022 in the US, EU and China.

Currently, the electric cars sold in India are nearly 40% more expensive than their petrol or diesel counterparts. The government recently announced lowered GST rates from 12% to 5% on electric vehicles and 18% and 5% on the charging stations, post which companies including Tata Motors, Mahindra & Mahindra and Hyundai announced price cuts to pass on the benefit to the customers.

“We will promote EVs, but it will be a holistic and integrated planning, where I have mentioned in my recent statements that all forms of transportation, which are clean and affordable, will be considered in our energy policy,” petroleum minister Dharmendra Pradhan said on Friday at the BNEF Summit in New Delhi.

ICE engine passenger vehicle sales currently are at 3.3 million annually. Annual electric passenger vehicle sales in India is seen to touch 2.6 million in 2040, when the country would be the fourth largest global market. Thanks to fuel and maintenance cost savings, such sales are seen to be taking place on the back of shared mobility services.

EVs would be affordable only after batteries become cheaper. Lithium-ion battery packs were priced at $1,200 per kilo-watt hour (kwh) in 2010 and it has come down to under $200/kwh in 2018. BNEF estimates that the implied price of the batteries would come further down to $62/kwh in 2030.