<aside> <img src="/icons/light-bulb_gray.svg" alt="/icons/light-bulb_gray.svg" width="40px" /> TL;DR The Indian Electric Vehicle (EV) market faces a status quo bias, hindering adoption due to consumer unfamiliarity, biases, and misinformation. To address this, innovative strategies should focus on effective communication, addressing biases, and regulatory measures like the suggested novel "Cost and Comparable" (C&C) tag. The C&C tag provides information to break biases, promote EV benefits, and includes social proof.
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The Indian consumer is currently not adopting Electric Vehicles (“EV”) as a form of private transportation even though the government and the industry have started providing incentives and products, respectively, for this sector. The question is whether this decision or rather indecision, of not considering an electric vehicle as a viable form of personal transportation, is due to a status quo bias where -
This status quo is further solidified through a combination of availability bias, familiarity bias, anchoring effects and loss aversion which renders consumers resistant to change. These behavioural and belief biases, as briefly explained in these resources (Ehrlinger, Readinger and Kim, 2016; The Decision Lab, 2023) are discussed in section 2.1.
When we have barrel-to-wheel renewable energy, then EVs protect the environment and provide sustainable consumption. There are however, both physical (battery recycling issues, the scarce network of charging stations, etc) and psychological “(high vehicle prices, lack of technological knowledge, fear, individual habits and perceptions, range perception, etc.)” (Yeğin and Ikram, 2022) factors that hinder adoption of EVs.
In India, the Indian Electric Vehicle (EV) market was slated to be burgeoning from 2014 with the government's push through the FAME (Gulati, 2022) policies. However, the adoption of electric vehicles has been poor.
A retrospective analysis of this policy reveals that the allocated funds were only a fraction of what was required, and a deeper analysis of the issue reveals problems that exist in the political landscape in India and the vicious cycle of low EV adoption (Singh et al., 2023). The systems map provided highlights the issues in a clear manner.
(Map found here: https://embed.kumu.io/dfa0a926ec5e527a3bc851f91ac75a6e#map)
Historically, automotive brands such as Maruti, Honda, Suzuki, Hero, etc have held brand equity for decades with ICE vehicles. However, when it comes to EV products, these incumbents are not readily bringing in the electric vehicle revolution. A deeper analysis reveals that doing so would affect their current processes “High manufacturing and R&D expenses, raw material supply restrictions, and poor production capacity all have an impact” (Irfan Khan, 2022) and sales prospects (EVs require negligible maintenance, while ICE vehicles need regular maintenance - which serves as recurring revenue). Small and newer players are more agile but not resourced well enough. Brands such as Ola, Ather and Okinawa receive a lot of bad press, especially with regard to vehicle safety, which are further lobbied by incumbents to delay the adoption of EVs by framing EVs as a new and untested technology that still requires years to mature.
Between 2014 and 2023 when EVs were gaining some attention, Indian consumers have been bombarded with inconsistent, contrasting and confusing information about electric vehicles. In the context of the EV market, status quo bias can manifest in consumer resistance to adopting EVs due to familiarity with traditional internal combustion engine (ICE) vehicles or concerns about range anxiety, safety and charging infrastructure. This status quo leads to a lack of adoption which in turn creates issues at the economic level. If there is no adoption, India faces the risk of continued dependence on oil imports for transportation, technology dependence on mature economies, and overall supply chain issues - these factors could cost the country $14 Billion annually over the next 10 years (Singh et al., 2023).