India Electric Vehicle Market Size (2024-2030)

According to the report published by Virtue Market Research in India Electric Vehicle Market was valued at USD 8.19 billion and is projected to reach a market size of USD 115.63 billion by the end of 2030. Over the forecast period of 2024-2030, the market is projected to grow at a CAGR of 45.97%.

The electric vehicle industry encompasses the production, sale, and adoption of vehicles that run on electricity from fossil fuels, like gasoline or diesel. The electric vehicle market is growing aggressively in India. Attracting attention from manufacturers, investors, and the government. The Indian government has set goals to promote mobility and reduce pollution making it one of the most promising markets for electric vehicles globally. Moreover, numerous states have put forth measures to promote the adoption of automobiles by providing incentives such, as exempting road taxes and offering benefits. Several domestic and international automobile companies have shown interest in India’s vehicle (EV) market. Prominent companies like Tata Motors, Mahindra & Mahindra, and Hero Electric have already introduced their vehicles while global players, like Tesla, are also considering delving into the potential of India's growing EV market.

Key Market Insights:

In 2022 the Ministry of Heavy Industries, in India gave its approval for a total of 2,877 charging stations for vehicles. Among these 50 charging stations were successfully established on July 1st, 2022.

In the year 2023, the sale of two-wheelers in India reached several 720,733 units. Ola emerged as the market leader with around a 21% share, in the country’s electric vehicle market.

Electric three-wheelers are gaining popularity, in India with an increase, in sales. In March 2023 the sales of three-wheeler passenger vehicles went up by 23% while the sales of cargo type three wheelers rose by 56%. Notably, Mahindra and Mahindra sold a total of 3,538 passenger vehicles during that month.

In March 2023 the Society of Manufacturing Electric Vehicles reported that India witnessed a total of 86,067 sales of two-wheelers (E2Ws). It is projected that the sales of two-wheelers, in India could grow by a rate of 80% by the year 2030.

India Electric Vehicle Market Drivers:

Increasing Fuel Prices Will Spur Market Growth in the Projection Period.

The increasing prices of fuels, in India are expected to be a driver of the demand for electric vehicles in the region. The upfront cost of buying vehicles that run on fuels may be lower, than those running on electricity. Their ongoing expenses are higher due to the increasing prices of gasoline and diesel. On the other hand, electric vehicles have operating costs compared to their fossil fuel counterparts. As a result, consumers are likely to lean towards adopting vehicles as a response to the rising fuel prices, which will contribute to the growth of the market in the future. Furthermore, the actions taken by governments to address climate change, such, as implementing regulations, on emissions and gradually phasing out vehicles will also contribute to driving market growth in the run.

The market will grow as long as the cost of electric vehicle batteries continues to decline.

The Indian automotive market is well known for being highly sensitive, to prices so any decrease in the cost of lithium-ion batteries has an impact on its growth. One crucial factor that drives the adoption of vehicles (EVs) is the reduction in battery costs. This helps make owning and operating an EV affordable especially considering that costs have traditionally been high in India. Over the decade battery costs have witnessed an 85% decrease leading to a surge in the adoption of EVs across different vehicle categories. Back in 2010 a kilowatt hour (kWh) of battery used to cost USD 1200 but now it has significantly dropped to around USD 130 150 per kWh as of 2021. This decline can be attributed to factors such as improved efficiencies, advancements, in cell chemistries, and various other parameters.

The need for a vast network of public transportation is fueling the sales of EVs.

However electric buses had a market share of 0.2% in 2022. Nevertheless, the government's commitment, to achieving zero emissions by 2070 and the implementation of programs promoting vehicles are now encouraging the utilization of EVs in transportation. As a result, there has been an increase in e-bus sales since the quarter of 2023 with a sequential growth rate of 39%.

India takes pride in having one of the bus fleets but unfortunately, most buses still rely on fossil fuels. Shifting towards buses that run on electricity can play a role in reducing emissions and combating air pollution in areas. Electric buses provide transportation solutions that align with cities' climate and environmental goals. Consequently, there is a rising demand, for expanding public transportation networks that contribute to market growth.

India Electric Vehicle Market Restraints and Challenges:

Huge capital investment may slow down market growth.

Setting up a manufacturing facility, for vehicles the units that produce batteries requires a substantial amount of money. Battery production is a part of electric vehicle manufacturing and its significant cost can discourage players from entering the market and limit the size of their operations. Developing a network of charging infrastructure is also quite expensive. It involves constructing charging stations in locations such as places, highways, and residential areas which demands a considerable financial investment. One of the reasons why electric vehicles are more expensive than traditional ones is because of the high upfront costs associated with their batteries. Despite advancements, batteries can still be costly which increases the price tag of electric vehicles. As a result, this substantial capital investment acts as an obstacle, to the growth of the market.

People's Safety Concerns About Fire Hazards Are Likely to Slightly Restrain Market Growth.

Electric vehicles have not gained popularity in India as compared to other countries. Additionally, consumer awareness, in the region is considerably low. Thus when recent fire incidents occurred involving two-wheelers from companies like Ola Electric, Pure EV, and Okinawa doubts were raised regarding the safety of using these vehicles. Consequently, the Indian government initiated an investigation, into these leading brands’ EV models to determine the cause and hold those for these safety breaches accountable.

Afterward, these players decided to bring their EV models to prevent any risks of fire. For example, Ola Electric recalled 1,441 units of their two-wheelers while Okinawa also called back 3,215 units of their electric scooter Praise Pro to address battery-related issues. Additionally, Pure EV recalled around 2,000 units of their Epluto 7G and Etrance+ models. Moreover, the lack of an established EV ecosystem in India remains one of the challenges hindering the widespread adoption of electric vehicles, in the region.

India Electric Vehicle Market Opportunities:

The Indian government has launched the 'FAME (Faster Adoption and Manufacturing of Electric Vehicles) Subsidy scheme' to incentivize the use of vehicles, in the country. This subsidy enables buyers to purchase electric (hybrid and battery-powered) vehicles at prices. The subsidy program, known as FAME II (phase) has been extended until March 2024. It primarily focuses on promoting sales of public vehicles.

A total of 8.59 vehicles have been sold under the FAME subsidy scheme as of February 2023. Government subsidies also serve as an encouragement for automobile manufacturers to invest in the production of vehicles. When manufacturers witness a rising demand, in the market backed by government support they are more inclined to allocate resources and focus on developing vehicles. As a result, consumers benefit from a selection of electric vehicle models. These subsidies align with the government’s objectives to reduce air pollution and combat climate change. All these factors combined create an opportunity for market growth, in the future.

INDIA ELECTRIC VEHICLE MARKET REPORT COVERAGE:

India Electric Vehicle Market Segmentation:

India Electric Vehicle Market Segmentation: By Propulsion Type

• Battery electric vehicle
• Hybrid electric vehicle

In 2022, based on the propulsion type, the Battery electric vehicle segment accounted for the largest revenue share by almost 67% and has led the market. Battery electric vehicles (BEVs) are the growing propulsion type, in the EV market. Experts anticipate that the Battery Electric Vehicle (BEV) sector will witness a growth rate of 35% annually between the years 2023 and 2029. In years there have been technological advancements in battery technology in India resulting in improved energy density driving range and charging speed. These advancements have effectively addressed concerns, about range anxiety making battery electric vehicles more practical and convenient for use. To ensure standardization and ease of assembly standardized battery cells are commonly utilized in vehicles. This modular design allows for scalability based on the size and range requirements of vehicles. Moreover, automakers have made investments. Show a keen interest in producing battery cells domestically which further contributes to the growth of this industry segment. To promote the adoption of electric vehicle batteries the Government of India has implemented measures to reduce customs duty on lithium-ion batteries from 21% to 13% as part of its Union Budget for 2023. This reduction is aimed at enhancing production capacity, within the country and encouraging utilization of electric vehicle batteries.

India Electric Vehicle Market Segmentation: By Platform

• Two-wheeler
• Three-wheeler
• Four-wheeler

According to the market analysis conducted in 2022, it has been found that the four-wheeler segment holds a market share and is expected to maintain its position, in the future. Compared to two-wheelers and three-wheelers four four-wheelers have longer driving ranges making them more practical for commutes and trips. As a result, electric cars have become increasingly attractive to a range of consumers. To combat greenhouse gas emissions and air pollution the Government of India is actively promoting the use of cars by offering incentives such, as subsidies, tax benefits, and reduced registration fees specifically aimed at encouraging their adoption.

However, there is a rise, in the market for two-wheelers. The growth can be attributed to the increasing adoption of two-wheelers by logistics companies in India. Moreover, the affordability factor of scooters, in India also fuels the expansion of this segment. Moreover, setting up charging infrastructure for two-wheelers is relatively easier compared to charging stations for cars. Simple charging solutions, like home charging or workplace charging, are sufficient to meet the needs of two-wheeler users.

India Electric Vehicle Market Segmentation: By Vehicle Type

• Passenger Vehicles
• Commercial Vehicles

The passenger vehicle category currently holds the market share. Passenger vehicles, including cars, are the commonly used mode of personal transportation. The demand, for passenger vehicles is generally higher compared to types of vehicles such as commercial vehicles or industrial machinery. Charging infrastructure has primarily focused on supporting vehicles used by passengers. Charging stations have been installed in areas, residential complexes, and public spaces to provide options for consumers to charge their electric cars.

As the urban population continues to grow in India there is an increased demand for environmentally friendly transportation solutions for commuting. Passenger EVs offer a practical mobility solution.

Furthermore, passenger cars dominate the market as the growing segment. There is a demand for passenger cars due to their range of options, comfort, and luxury features while maintaining clean emissions. Considering this trend, in purchasing passenger EVs commercial vehicles are also expected to experience growth during the period 2022 2030.

India Electric Vehicle Market Segmentation: Regional Analysis:

• Uttar Pradesh
• Delhi
• Karnataka
• Gujarat
• Maharashtra
• Rest of India

Uttar Pradesh, Delhi, and Karnataka have emerged as the three states in terms of electric vehicle registrations, in India. A total of 870,141 vehicles have been registered across the country. Uttar Pradesh leads with the number of registered vehicles reaching 255,700 units. Delhi follows with 125,347 units while Karnataka has 72,544 vehicles.  Additionally, Bihar has 58,014 vehicles. Maharashtra has 52,506 electric vehicles. Furthermore, the government of Maharashtra provides incentives like a subsidy of around USD 65 per kWh of battery capacity and exemptions from road tax and registration charges to promote the adoption of vehicles. To support this movement towards transportation options like electric vehicles in India the central government introduced policies under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles program. Moreover, to encourage the growth of vehicle charging infrastructure development in India the central government reduced the Goods and Services Tax (GST) on both vehicles (from 12%) and charging stations. These initiatives have played a role, in boosting sales and adoption rates for vehicles across India.

COVID-19 Impact Analysis on the Global India Electric Vehicle Market:

The electric vehicle manufacturers, in India faced challenges during the Covid 19 pandemic. The temporary closure of manufacturing facilities disrupted the supply chain causing a shortage of materials that greatly impacted the industry growth. The production of these vehicles in India was particularly affected by the semiconductor crisis. In 2020 4600 electric four-wheelers (e 4W) were sold in India. Despite the expected growth from the government’s FAME II subsidies for electric vehicle purchases the Covid-induced lockdowns and reduced manufacturing output resulted in slower growth than anticipated. However, there is now a recovery in this market thanks to initiatives by the Indian government and substantial subsidies and incentives at the state level. For example, e 4W sales increased by 287.1% in 2021. Additionally, there has been growth, in bus sales but with FAME II-supported e-bus deployment coming soon it is expected to further support market growth.

Latest Trends/ Developments:

The market is currently witnessing a rising trend, in the demand and popularity of micro vehicles specifically electric two-wheelers and three-wheelers. In India, where the majority of people prefer two-wheelers for their commute due to increasing traffic congestion the low cost of two-wheelers and three-wheelers compared to four wheelers along with their suitability for Indian road conditions is expected to drive the adoption of these vehicles in the foreseeable future. For example, electric two-wheelers in India are priced around USD 600 to USD 3,755 which is significantly lower than the cost of four-wheelers. Some popular models in India include Revolt RV 400 and Tork Kratos among others. To cater to the increasing demand several Indian brands are venturing into the market to take advantage of the opportunities arising from the adoption of vehicles, in India's expanding sector. Moreover, with government programs like FAME India subsidies and a shift in consumer preference, towards transportation options, it is expected that this market will thrive in the years.

Key Players:

1. JBM Auto Limited,
2. Mahindra Electric Mobility Limited,
3. Ather Energy Pvt Limited,
4. Electrotherm,
5. Ola,
6. TVS,
7. Toyota,
8. Renault Group,
9. Tata Motors,
10. Bajaj Auto.

In July of 2023, Maruti Suzuki announced its plans to introduce the Maruti Suzuki Brezza EV in the market. This electric vehicle is set to pose a challenge, in the market because of its range of 550 kilometers and a powerful 60-kilowatt battery pack. Furthermore, it aims to incorporate a system that supports both Apple CarPlay and Android Auto.

Enigma Automobiles, a company based in Madhya Pradesh introduced their scooter model called the N8 in July 2023. With a price tag of Rs.1.08 Lakh, this scooter offers a range of 200 kilometers on a charge.

In June 2023 India’s Tata Group invested an amount of $1.6 billion to establish a battery production plant in Gujarat for electric vehicles. This partnership with the Gujarat state government aims to boost vehicle production and promote sustainability.