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:
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.