India's Electric Vehicle Revolution: Trends, Challenges and Opportunities

India's Electric Vehicle Revolution: Trends, Challenges and Opportunities

Last updated: Jan, 2025
India's Electric Vehicle Revolution: Trends, Challenges and Opportunities

The Electric Vehicle (EV) market around the globe is experiencing significant expansion, as countries aim to reduce carbon emissions and transition toward sustainable ways of transportation. Markets such as China, Europe and the US are leading the way, with targets to phase out Internal Combustion Engine (ICE) vehicles and promote EVs through government incentives, enhanced charging infrastructure and technological advancements. Major players in the automobile industry such as Tesla, Volkswagen, and BYD are heavily investing in EV technology across various segments, including passenger vehicles, public transport and logistics. While countries are pushing for widespread EV adoption, technological innovations in battery efficiency and the declining costs of lithium-ion batteries are key factors driving its global growth. 

India, the third-largest automobile market, is taking significant steps in its EV revolution, driven by the need to reduce its dependence on imported fossil fuels and tackle severe urban air pollution. The government has launched important initiatives like the National Electric Mobility Mission Plan (NEMMP) and the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) programs, aiming to electrify public transportation as well as two and three-wheeled vehicles. The government also aims for 30% of new vehicle sales to comprise of EV by 2030. Despite these efforts, EV adoption challenges remain, including high vehicle costs, inadequate charging infrastructure and supply chain issues. However, domestic players such as Tata Motors and Hero Electric are now investing in the EV space. Moreover, with India’s large market potential, skilled workforce and renewable energy resources, the country is well positioned to overcome these barriers and become a significant player in the global EV landscape. 

India’s EV landscape 

EVs in India have been gaining momentum in recent years due to factors such as growing environmental awareness, rising fuel costs, government incentives, urbanisation and traffic concerns in major cities in the country. 

Source: SMEV, Includes two-, three-, four-wheelers and electric buses

EV sales in India have been experiencing an upward trend, mainly driven by two and three-wheeler sales. As shown in the above chart, EV sales in India grew from 95,198 units in 2017-18 to 1,670,736 units in 2023-24, growing at a CAGR of 61%. 

Of the total sales of 2023-24, approximately 57% (944,126 units) of the sales comprised two-wheelers. This substantial share of two-wheelers in the EV space is mainly due to the rise in adoption of sustainable alternatives to traditional scooters. As metro cities today are getting more congested, EV scooters, which are primarily used for daily commute within the city, are gaining popularity. Electric two-wheelers benefit its users through cost efficiency as battery-powered scooters deliver better mileage as compared to the ICE two-wheelers. Companies such as Ather and Ola have gained popularity, capturing majority of the market share in this space. Other seasoned players in the two-wheeler space such as Bajaj, Hero MotoCorp and TVS are also catching up to this growing adoption of EVs. 

Source: Fortune Business Insights, F- Forecast

According to Fortune Business Insights, the EV market in India was valued at US$ 8.03 billion in 2023. The market is anticipated to almost triple in size and expand to US$ 23.38 billion by the end of 2024. With the tremendous potential for expansion and the rising adoption of EVs, the market is expected to grow further and reach US$ 117.78 billion by 2032, with a CAGR of 22% between 2023 and 2032. 

Since India relies on imports for about 80% of its crude oil needs, fuel prices tend to be quite high. This has a chain effect on the end-users, making them prone to look for cost efficient alternatives. NITI Aayog is aiming to attain net zero carbon emissions by 2070 and aims to achieve 70% penetration of EVs in all types by 2030.  

Source: PIB

The number of Electric Vehicles (EVs) registered in India has consistently increased, particularly after 2020. In 2018, there were a total of 1.30 million units of EVs registered in India. In 2023, EV registrations reached 15.29 million units, displaying a positive trend of consumer adoption. The rise in EV registrations in recent years has been fuelled by supportive government policies and a shared goal of reducing CO2 emissions. Launched in 2015 in two phases, the FAME scheme has been instrumental in promoting the adoption of Electric Vehicles (EVs) in India. The first phase of the FAME scheme lasted from 2015-19. The second phase was launched in 2019 with a total budget of US$ 1.43 billion (Rs. 10,000 crore). This phase focuses mainly on making public and shared transportation electric. It provided incentives totalling US$ 234 million (Rs. 1,869 crore) to support 470,000 EVs. Additionally, it approved 6,315 electric buses for use in over 65 cities and sanctioned 2,877 charging stations. Over 100 EV models were also approved between 2019 to 2024. 

Trends in the EV industry 

India’s EV market is experiencing transformative growth, driven by evolving consumer preferences, technological advancements and increased investment from both the public and private sectors. Several key trends are emerging, as the EV industry transitions from an experimental phase to a conventional market. The below trends play a key role for the future of EV industry in India: 

  • Technological advancement
    • One of the most prominent trends in the EV revolution is the continuous advancement in technology, especially in terms of battery design, efficiency of vehicles and charging solutions. Improvements in lithium-ion batteries, which are widely used in EVs, have resulted in enhanced energy density, longer driving ranges and faster charging times. Indian companies and global manufacturers operating in the country are investing heavily in research and development (R&D) to bring advanced battery solutions to the market. Additionally, there is increasing focus on developing alternative battery chemistries, such as solid-state batteries and sodium-ion batteries, which promise further cost reductions and enhanced performance.
    • Moreover, smart features such as regenerative braking, connected vehicle technologies and Over-The-Air (OTA) software updates are being integrated into modern EVs, offering consumers an overall better experience. The development of AI-driven electric autonomous vehicles (EV-AVs) is also an upcoming concept, with major automakers exploring futuristic electric cars that offer driverless capabilities. These advancements are making EVs more appealing to tech-savvy consumers and are expected to accelerate their adoption.
  • Increased investments and partnerships
    • The Indian EV industry has witnessed a surge in investment from both domestic and international players. Global automakers such as Tesla, Hyundai and MG Motors are entering the Indian EV market or expanding their existing EV portfolios, while domestic big player such as Tata Motors, Mahindra Electric and Hero Electric are scaling up their EV manufacturing capabilities. Startups such as Ather Energy and Ola Electric are also making significant strides in the two-wheeler segment. This influx of investment is not only boosting EV production but also facilitating the development of charging infrastructure, battery technology and related services. As per recent news, Hyundai Motors intends to invest in Tamil Nadu a sum of US$ 2.45 billion in the next 10 years to enhance its EV initiatives in India. Also, the Hyundai Motors is planning to assemble EV battery packs and install 100 charging stations for EVs.
    • Additionally, strategic partnerships and collaborations are gaining traction as companies seek to leverage each other’s expertise. Automakers are partnering with battery manufacturers, technology providers and energy companies to create an ecosystem of their own that supports their long-term fleet electrification goals. Uno Minda, which manufactures automotive components, announced in April 2024 that it has partnered with Suzhou Inovance Automotive Co., which is based in China, to manufacture EV components. Additionally, in December 2023, Hero MotoCorp, the top global two-wheeler producer, has partnered with Ather Energy for a compatible fast-charging network in India. This partnership enables EV users to access VIDA and Ather Grids nationwide. The government has been pushing for Public-Private Partnerships (PPPs) and has encouraged collaboration between industry players to tackle the various challenges of the EV industry.
  • Rising consumer awareness of sustainability
    • Another major trend is the growing consumer awareness around sustainability and the environmental impact of transportation. With increasing air pollution levels in Indian cities and rising concerns about climate change, consumers are becoming more careful of their carbon footprint and are actively seeking sustainable alternatives to ICE vehicles. This has led to EVs gaining traction as a preferred solution to reduce pollution and manage climate risks alongside.
    • The government’s aggressive marketing campaigns, along with environmental promotion by NGOs and social media influencers, have played a crucial role in educating consumers about the benefits of EVs. Consumers are increasingly seeing EVs not only as a means of cost-saving due to lower operating costs but also as better choice for sustainable living. The shift in mindset is especially prominent among younger, tech-savvy consumers who value innovation and environmental safety.
  • Electrification of public and shared transport
    • India is a developing nation with the largest population in the world. With 70% of the country's population belonging to the middle-class, the use of public transport has always been the most as compared to private vehicles. This has enabled India’s electrification journey to not be limited just to private vehicles. There is a strong push toward the electrification of public transport and shared mobility services, including electric buses, auto-rickshaws, and ride-hailing platforms. Of the total 1,670,736 units of EVs sold in 2023-24 in India, 3,693 units were electric buses. This category of EVs has seen a multi-fold growth from just 19 units in 2017-18. Electrifying public transport is seen as a major step toward reducing pollution in densely populated cities. Hence, various state governments are introducing policies to increase the number of electric buses in operation. The Maharashtra State Road Transport Corporation (MSRTC) E-Bus Project, initiated in 2021 along with the support of FAME II subsidy, stands as a breakthrough to revolutionise public transportation in Maharashtra.
    • Ride-sharing companies like Ola and Uber are also increasingly incorporating EVs into their fleets, responding to both consumer demand and regulatory pressure. These shifts represent a significant move toward a sustainable future of transportation, helping India address two major challenges of pollution and congestion.

Road ahead 

India’s EV market is on the path for rapid growth, supported by a favourable policy framework, technological advancements and the government’s vision of reaching 30% EV penetration by 2030. The way to this transition includes the expansion of public and private charging infrastructure, deployment of gigafactories for battery manufacturing and the promotion of battery swapping technologies for two and three-wheelers. The PLI scheme will play a pivotal role in reducing reliance on imports and lowering battery costs to under US$ 100/kWh, crucial for widespread adoption. By 2030, India could also emerge as a global manufacturing hub, exporting electric two and three-wheelers and key EV components. Collaboration between government, industry and startups in areas such as smart charging solutions, battery recycling and advanced chemistry cells will drive innovation. With sustained efforts, India is well-positioned to become a leader in the global EV revolution, while simultaneously reducing carbon emissions and enhancing energy security. 

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