Indian Economy News

According to a report by ICRA Ratings, robust growth has been predicted by the year 2025 in Indian electric vehicle market

  • IBEF
  • November 1, 2023

As per the report released by ICRA Ratings, the rate of adoption of electric vehicles is rising at a healthy pace, owing to increased product introductions, increased government backing in the form of subsidies, and increased awareness. In an effort to create cheaper electric vehicles, Original Equipment Manufacturers (OEMs) are also concentrating on value engineering projects. By FY25, it is anticipated that there will be a large increase in the use of electric buses, electric two-wheelers, and electric three-wheelers.

The report also highlights that the electric two-wheeler segment has emerged strongly, accounting for 85-90% of total Electronic Vehicles (EV) sales and selling more than 7 lakh units in FY23. The penetration of electric two-wheelers in overall two-wheeler sales rose to nearly 5%. It is evident to attribute this rise to government incentives that encouraged adoption. The adoption rate of electric two-wheelers has slowed down a little due to the FAME-II policy's reduction in subsidy advantages, which took effect in June 2023. Nevertheless, the market is expected to grow by 10–12% in FY25, indicating the segment's continued appeal.

In FY23, electric three-wheelers gained traction, achieving a penetration rate of 7%, and are expected to grow by 14-16% in FY25. Meanwhile, in FY23, the sales of electric buses, buoyed by government measures surged with over 1,800 units sold.

Electric cars are considered an intermediate step towards full EV adoption and gaining traction. Concerns about range anxiety are lessening as more customers adopt the product. Even though subsidies have decreased, this slow transition is anticipated to continue. The report also mentioned that the market share of electric vehicles could increase by 4-6% in FY25.

In the midst of the electrification transition, OEMs are making substantial investments in EV platforms and manufacturing capacities. Such investments are encouraging for the industry's future competitiveness, even though it can reduce short-term revenues. In order to increase exports, efforts are also being made to improve distribution networks and capacities.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.