The Covid-19 pandemic and its economic impact on India did not discourage savvy investors from pursuing chances in the electric vehicle and e-mobility industries. This is supported by a significant number of financial transactions and the funds involved.

e2W, e4W, EV component producers, electric commercial vehicles, and last-mile delivery firms invested a total of Rs. 25,045.31 crore (US$ 3.37 billion) between January and July 2021.

With a 32% share of the investments, electric commercial vehicles took the lead. Oye! is an e-mobility startup. Rickshaw intends to invest Rs. 3,700 crore (US$ 499.22 million), accounting for 15% of the entire investment. Omega Seiki Mobility accounted for 9% of the market, with the company aiming to become a global brand and India's leading commercial vehicle player. Ashok Leyland plans to transfer its entire electric vehicle (EV) business to Switch Mobility, a 100% subsidiary, in a few years, and has invested Rs. 1,485 crore (US$ 200.36 million) in the process.

Electric 4W witnessed a 28% investment, with M&M investing Rs. 3,000 crore (US$ 404.77 million) and contributing 12%. It has already invested Rs. 1,700 crore (US$ 229.37 million) in India's electric vehicle (EV) market, with another Rs. 500 crore (US$ 67.46 million) set aside for a new R&D centre.

Hyundai of South Korea announced an investment of Rs. 3,200 crore (US$ 431.76 million) in February 2021, and another investment of Rs. 743.31 crore (US$ 100.29 million) in July 2021. The future electric car from the firm is believed to be a mini-SUV.

In the first seven months of 2021, the e2W space saw a total investment of 23%, with Triton Electric Vehicle Pvt. Ltd. leading the way with 8%, TVS Motor Company with 4%, and Hero Electric, Ampere, and Ather Energy with 3% apiece.

Companies including C4V, Lohum, Ruchira Green Earth, and Sona Comstar invested a total of 19% in EV component makers. C4V, a renowned lithium-ion cell manufacturer based in the United States, contributed 16% of the total investment.

“Given the early stages of EV technology development, significant investments in R&D and product development are necessary, both in terms of automotive platforms and battery technology. EVs are the way forward for the vehicle industry in the face of tightened emissions and more awareness about the environment. As a result, established OEMs and their vendors, as well as startups like OLA and Ather, are investing to secure a foothold in the industry. The total cost of ownership of electric vehicles is becoming more appealing as a result of demand incentives offered under FAME II (which have just been doubled), the introduction of state laws, and rising fuel prices.” said Mr. Shamsher Dewan, vice-president, ICRA.

This shift in trend can be attributed to the long-term growth potential it provides to its investors, as well as changes in consumer behaviour as people prefer their own vehicles to shared mobility, as a result of the pandemic, rising popularity of E2Ws due to their performance and futuristic features (such as IoT connectivity), and growing awareness among the younger generation.

“Various states, such as Andhra Pradesh, Maharashtra, Karnataka, and Tamil Nadu, have begun to provide a variety of effective laws and incentives for manufacturing. Investors are encouraged by the entry of large businesses such as Hero, TVS, Bajaj, and Ola. Because of the favourable ecosystem in terms of localization during the last year, the industry has been able to survive despite Covid-19” Mr. Sohinder Gill, CEO, HeroElectric, said.

In the first seven months of 2021, India's EV and mobility service firms received Rs. 1,652.15 crore (US$ 222.91 million) in funding, topped by Ola Electric, which received Rs. 743.31 crore (US$ 100.29 million) and contributed 45%. This 10-year debt will be used to fund and close Phase 1 of the Ola Future facility, which will be Ola's worldwide production hub for electric two-wheelers.

On July 11, 2021, Hero Electric raised new cash in the form of part one of a Series B investment round of Rs. 220 crore (US$ 29.68 million) headed by Gulf Islamic Investments (GII), accounting for 13% of the overall funding.

“Due to a lack of charging infrastructure, import dependence on a few EV components, a lack of financing options, and limited demand, investors are still hesitant to spend more money in the EV sector. EV demand has been hampered by high upfront costs, with EV sales accounting for less than 1% of total car sales. However, recent policy announcements by several state governments, as well as the FAME II subsidy assistance, should assist the e2W and e3W segments in becoming early adopters of electric vehicles in India,” Mr. Shamsher Dewan said.

“There are certain internal and external challenges associated with the EV industry, such as lack of awareness, lack of financing with financers not willing to take a risk in financing EVs for individuals and meeting the changes that have come in the product portfolio in terms of production, manufacturing, and component supplies,” Mr. Sohinder Gill said.

According to an independent research undertaken by the CEEW Centre for Energy Finance (CEEW-CEF), if India meets its 2030 objective, the EV market in India will be valued US$ 206 billion by 2030. This will necessitate a total investment in vehicle manufacture and charging infrastructure of more than US$ 180 billion.