The electric vehicle (EV) industry in India is accelerating at an unprecedented pace, driven by robust government support, growing consumer demand, and significant investments. As the nation aims to reduce its carbon footprint and embrace green mobility, the EV sector is poised to transform India’s transportation landscape. This article explores the current state of the electric vehicle market in India, its growth drivers, key trends, and future opportunities, based on insights from the India Brand Equity Foundation (IBEF) report published in November 2024.
A Booming Market with Strong Growth Projections
India’s electric vehicle market is on a trajectory of “strong and steady” growth through 2030. In May 2024, EV sales surged by 20.88%, reaching 1.39 million units, reflecting rising consumer interest. According to Fortune Business Insights, the Indian EV market, valued at $3.21 billion in 2022, is projected to skyrocket to $113.99 billion by 2029, achieving an impressive compound annual growth rate (CAGR) of 66.52%. Globally, the EV market was valued at $255.54 billion in 2023 and is expected to reach $2,108.80 billion by 2033, with a CAGR of 23.42%.
The Indian government has set ambitious targets to accelerate EV adoption: 30% of private cars, 70% of commercial vehicles, 40% of buses, and 80% of two- and three-wheelers sold by 2030 should be electric. This translates to an estimated 80 million EVs on Indian roads by the end of the decade, as per the Confederation of Indian Industry (CII).
Government Initiatives Fueling the EV Revolution
The Indian government is a key catalyst in this transition. The PM E-DRIVE scheme, launched with a budget of Rs. 10,900 crore ($1.30 billion) from October 2024 to March 2026, aims to boost EV adoption, expand charging infrastructure, and enhance manufacturing capabilities. Additionally, the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) Phase-II scheme has provided subsidies worth Rs. 5,790 crore ($693 million) to EV manufacturers, supporting the sale of over 1.34 million electric vehicles.
The Electric Mobility Promotion Scheme, with a Rs. 778 crore ($93.5 million) budget, ran from April to September 2024, offering incentives for electric two-wheelers (e-2Ws) and three-wheelers (e-3Ws). Meanwhile, the government plans to replace 800,000 diesel buses with electric alternatives within seven years, further reducing emissions and stimulating infrastructure investments.
State-level policies are also driving progress. For instance, Bihar’s EV Policy-2023 targets a 15% EV share in vehicle registrations by 2028, offering subsidies and tax incentives. Tamil Nadu, a hub for EV manufacturing, is set to introduce a battery manufacturing policy to strengthen its position in the global EV supply chain.
Charging Infrastructure: The Backbone of EV Growth
A robust charging network is critical to sustaining this growth. As of February 2024, India had 12,146 operational public EV charging stations, with Maharashtra leading the tally, followed by Delhi and Karnataka. The Ministry of Heavy Industries has approved 7,432 charging stations under FAME-II, backed by a $96.28 million subsidy. The CII estimates India will need 1.32 million charging stations by 2030, requiring 400,000 annual installations.
To make EVs more accessible, the government has reduced GST on electric vehicles from 12% to 5% and on chargers from 18% to 5%. Companies like Hyundai Motor India are expanding ultra-fast charging networks in cities like Mumbai, Pune, and Bangalore, enhancing convenience for EV users.
Key Trends and Innovations
The Indian EV industry is witnessing groundbreaking advancements:
- Investments: In 2024, major players like Tata Motors-JLR ($1.07 billion), VinFast ($2 billion), and Mahindra & Mahindra committed significant funds to EV projects. Ola Electric raised $385 million in 2023 from Temasek-led investors.
- New Models: Tata Passenger Electric Mobility launched the Punch.ev in January 2024, while Ola Electric introduced the Raahi electric autorickshaw in March 2024.
- Partnerships: Hero MotoCorp and Ather Energy collaborated in 2023 to create a fast-charging network, while BluSmart partnered with Tata Power for renewable energy-powered charging.
- Battery Swapping: Indian Oil Corporation opened its first battery-swapping station in Kolkata in December 2023, in collaboration with Sun Mobility.
Two-wheelers dominate the market, accounting for 56% of EV sales by volume in 2023, with projections to exceed one million units in 2024. Maharashtra leads in two-wheeler sales, while Mumbai alone surpassed 10,000 electric cars by June 2024.
Opportunities for Growth
India’s cost-effective manufacturing base, skilled workforce, and over 700 EV startups create a fertile ground for growth. The EV battery market is expected to grow from $16.77 billion in 2023 to $27.70 billion by 2028. Companies like Maruti Suzuki plan to export high-spec EVs to Europe and Japan, while Hyundai Motor is investing $2.45 billion in Tamil Nadu over the next decade.
The auto sector has attracted $36.65 billion in FDI between April 2000 and June 2024, with initiatives like “Make in India” expected to draw further investments. Ola Electric’s upcoming IPO, valued at $1.01 billion, marks a milestone as the first auto company in India to go public in over 20 years.
Leading Players in the EV Ecosystem
- Tata Motors: A pioneer in EV manufacturing with models like the Punch.ev.
- Ola Electric: India’s top patent publisher in 2022-23, expanding into autorickshaws.
- Ather Energy: A unicorn valued at $1.3 billion after a $71 million investment in 2023.
- Battery Manufacturers: Exide, Okaya Power, and Livguard are scaling up production to meet rising demand.
Challenges and the Road Ahead
Despite its potential, the EV industry faces challenges like high upfront costs, limited rural penetration, and the need for faster charging infrastructure development. However, with government backing, private investments, and technological advancements, India is on track to become a global EV leader by 2030.
Conclusion
The electric vehicle industry in India is at a pivotal moment, blending innovation, policy support, and market demand to drive sustainable mobility. As the nation electrifies its roads, from bustling cities to rural landscapes, the EV sector promises not just economic growth but a cleaner, greener future. For businesses, investors, and consumers alike, India’s EV revolution offers a world of opportunities waiting to be tapped.