Valued at $3.21 billion in 2022, the Indian EV market is expected to grow to $113.99 billion by 2029, at an annual growth rate of 66.52%. Major policy shifts, cost-effective battery production and flourishing infrastructure are expected to be the crucial drivers for growth in upcoming years.
With consistent measures and policies to expand the EV market in India, the government is expecting the industry to reach a compounded annual growth rate (CAGR) of 49% in the period 2021-2030. The segment’s volumes is expected to cross annual sales of 17 million units by 2030.
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The year 2022 has been a crucial year for the EV market in India, as the industry crossed the milestone of 1 million unit sales, accounting for 4.7% of overall automobile sales.
According to government portal ‘Vahan’, EV registration recorded a threefold surge from 332,000 units sold in 2021 to 1,003,000 EVs registered with regional transport offices till December 31, 2022. The rise in sales is credited to high individual buying and Business-to-Business (B2B) purchases by EV fleet operators. Schemes and policy initiatives like FAME 2 and development of charging infrastructure have added to EV penetration in the country.
Electric Vehicle sales in India
| Calendar Year | Units sold | % growth |
| 2018 | 127,576 | 48.13 |
| 2019 | 163,459 | 28.12 |
| 2020 | 121,654 | -25.57 |
| 2021 | 322,871 | 165.40 |
| 2022 | 999,949 | 209.70 |
Source: parivahan.gov.in
With festival season demand and year-end discounts, November recorded the highest sales of EVs in 2022 with 119,419 units sold, followed by October (115,994) and December (102,000). A report released by Fortune Business Insights stated that the Indian EV market is predicted to grow to US$ 113.99 billion by 2029, from US$ 3.21 billion in 2022.
EV industry in India
Currently, the EV market in India comprises of three major segments, which include:
- E-Two wheelers: The segment accounts for 25-30% of the total market and is expected to reach 5 million by 2025. Ola electric, Hero Electric and Bajaj Auto are key manufacturers in this segment.
- E-Three wheelers: The segment accounts for 47% of all three-wheelers sold in India in FY 2021-22 and is predicted to account for 30% sales by 2025. Mahindra Electric, Piaggio Vehicles and Atul Auto are some of the manufacturers in India.
- Passenger Vehicles: In the first half of 2022, the PV segment accounted for only 1.17% of the overall passenger vehicle production in India. With various schemes and initiatives, the segment is predicted to grow at 16% in FY 2023. Tata Motors, Mahindra Electric and Kia are some of the key dealers in India.
With the government’s aim to go fully electric by 2030, several brands have come up in the electric vehicle segment in India. These include Tata Motors (Tata Nexon EV), Hero Electric Vehicles Pvt Ltd (Hero Electric Eddy), Mahindra Electric Mobility Limited (Mahindra eVerito), etc. From research and development to manufacturing and establishing charging stations, these companies offer EVs in battery, hybrid and plug-in hybrid variants. These players are also working towards equipment for EVs including GPS navigation, remote sensors and anti-theft locking systems etc.
| Electric Vehicle Sales (2017-2022) | |||||||||
| Category | 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 (Till 25th Dec) | Nov’22 | Dec’22 (Till 25th Dec) | Grand Total |
| E-2 Wheelers | 1,962 | 27,032 | 26,062 | 43,782 | 245,660 | 490,563 | 76,575 | 52,070 | 835,061 |
| E-3 Wheelers | 90,412 | 114,173 | 141,006 | 89,105 | 178,458 | 268,395 | 38,278 | 27,001 | 881,549 |
| E-4 Wheelers | 1,871 | 2,179 | 2,370 | 5,106 | 19,409 | 29,461 | 3,974 | 3,088 | 60,396 |
| E-Buses | 41 | 78 | 448 | 374 | 1,193 | 1,557 | 117 | 95 | 3,691 |
| Grand Total | 94,824 | 143,661 | 169,908 | 138,399 | 444,796 | 790,014 | 42,369 | 30,190 | 1781,602 |
Source: mev.in, Values in number of units*
Future challenges
Even with rising trends, India’s EV ecosystem is still at a nascent stage, as compared to other countries. The transition from combustion vehicle to Electric Vehicles is facing several challenges such as:
- Lack of Electric Vehicle Charging Stations (EVCS): Compared to the targeted e-vehicles on Indian roads, the number of charging stations is relatively low, contributing to the lower sales of EVs. At present there are only 1,742 EVCS in the country according to the IVCA-EY-IndusLaw report. Additionally, the long charging duration and expensive batteries are also contributing to the slow shift.
- High prices of EVs in India: Compared to other countries, only a few models of EVs are available in India which are reported for range issues and slow charging. Moreover, these models are hardly affordable. At present, the most affordable normal sized electric car costs a minimum of ₹ 12.49 lakh, whereas the cheapest petrol car is available with prices at around ₹ 3.8 lakh.
- Lack of awareness and encouragement about EVs: Apart from being environment friendly, EVs offer multiple benefits with which many people are not aware. Lower running and maintenance costs, tax and financial benefits, no noise pollution and convenient charging are some of the benefits of transitioning to EVs.
Government Initiatives
India is committed to reduce the emission intensity of its gross domestic product (GHG emissions per unit GDP) by 33%-35% by 2030. The government has sanctioned 2,877 electric vehicle charging stations in 68 cities across 25 states/UTs. Additionally, 1,576 charging stations across 9 Expressways and 16 Highways have also been sanctioned. In FY ’22, total charging stations in India recorded an increase of 285% YoY, which is expected to increase to around 4 lakh by FY26.
To meet its global commitment and alleviate the impact of the automobiles like increasing oil import expenses and increasing air pollution, the government is focusing the narrative towards electric vehicles. The following are the various schemes and policies introduced by the government for a successful transition towards electric vehicles:
- Faster Adoption and Manufacturing of (Hybrid and) Electric vehicles (FAME Scheme): To promote charging infrastructure in India, the government has allocated ₹ 10,000 crore under the phase-2 of FAME scheme. According to recently released data, 7,66,478 Electric Vehicles have been supported till 19th December, 2022 by way of Demand Incentive amounting to about ₹ 3,311 Cr under the FAME 2 scheme along with 2,877 charging stations in 68 cities across 25 states/UTs.
Further, the Ministry of Heavy Industries has sanctioned 6,315 e-buses to 65 cities/STUs/CTUs/ State Govt. entities for intracity and intercity operations across 26 states/UT under the Scheme. The flagship scheme for promoting electric mobility is implemented for a period of three years which is further extended up to 31st March, 2024 and offers below incentives:
| Total Approximate Incentives | Approximate Size of Battery |
| Two wheelers: ₹ 15000/-per kWh upto 40% of the cost of vehicles | Two wheelers: 2 kWh |
| Three wheelers: ₹ 10000/- per kWh | Three wheelers: 5 kWh |
| Four wheelers: ₹ 10000/- per kWh | Four wheelers: 15 kWh |
| E-Buses: ₹ 20000/- per kWh | E Buses: 250 kWh |
| E Trucks: ₹ 20000/- per kWh |
- Battery Swapping Policy: The policy aims to address all the battery challenges by promoting various technologies and business models to ensure lower upfront costs, minimal downtime and lower space requirements for battery charging.
- PLI for EVs: The government introduced the PLI scheme for Automotive Sector on 15th September 2021 (including EVs) with a budgetary outlay of ₹ 25,938 crores. Additionally PLI scheme for manufacturing of ACC with a budgetary outlay of ₹ 18,100 crore is launched to establish a competitive ACC battery manufacturing set up for 50 GWh.
- Phased Manufacturing Programme (PMP): To promote the development of electric vehicles, a phased manufacturing roadmap has been developed with reference to the current state of the manufacturing ecosystem in the country. Under this program, indigenous manufacturing of EVs, their assemblies/sub-assemblies, and parts/sub-parts/inputs of the sub-assemblies will be promoted over time according to a graded duty structure. The program has been launched to boost value addition and capacity building in the country.
With consistent measures and policies to expand the EV market in India, the government is expecting the industry to reach a CAGR of 49% in the period 2021-2030. The segment’s volumes is expected to cross annual sales of 17 million units by 2030.
Currently, the electric vehicles comprises less than 1% of the total vehicle sales, but offers a potential to grow more than 5% in upcoming years. The industry is hugely dependent on the incentives provided by the government. With the introduction to policies like FAME-2, the industry is expected to witness a quantum leap in volumes and technology. With an EV centric transport system, there is a great opportunity in reducing the carbon footprint, dependence on crude oil imports, creating jobs and building a new technology knowledge hub in India.
