The transport sector globally is overly dependent on liquid fossil fuels. Electric vehicles (EVs) are touted as a way of diversifying the fuel mix and helping to reduce dependence on fossil fuels. There could also be other co-benefits of EVs, such as improved energy security, decarbonising of the electricity sector, CO2 mitigation and reduction in local air pollution. The Indian government has recently launched a national electricity mobility mission to promote EVs. There is, however, much uncertainty in terms of the penetration of EVs in the transport sector, particularly those related to infrastructure and policies. While the literature on EVs has focused more on the role of electric cars, it could be electric two-wheelers which could make early headway, as is the case in China where nearly 120 million such vehicles had been sold by the end of 2012. Three scenarios (Business as Usual (BAU), Electric Vehicles, and Electric Vehicles Plus 2°), for EVs from 2010 to 2050, are analysed using the bottom-up energy system ANSWER MARKAL model. The paper makes use of global CO2 prices for aligning the model with global stabilisation targets. Electric two-wheelers and electric four-wheelers achieve cost competitiveness in the BAU scenario by 2035, but tax incentives in the EV scenario help in advancing this to 2020 for electric two-wheelers and to 2025 for electric four-wheelers. The diffusion of EVs would, however, depend on availability for charging infrastructures and a strengthened grid for handling increased electricity demand. EVs are not a mitigation option unless electricity is cleaned up, and EVs, together with smart grids and renewables, can provide a solution for this.

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