In 1996, the first electric vehicle (EV) in India was a three-wheeler invented by Scooter’s India Pvt Ltd, and it was back then called VIKRAM SAFA. Approximately 400 vehicles were made and sold. According to data from the Press Information Bureau (PIB), there were 124,654 electric vehicles (EVs) registered in Indian in 2020.
There is a growing push for manufacturers and policymakers to collaborate to shift demand towards greener options. The automotive sector is a major contributor to India’s economy, accounting for 7.1% of its GDP and providing significant employment.
The Economic Survey 2023 predicted that India’s domestic electric vehicle market would likely experience a 50% compound annual growth rate (CAGR) between 2022 and 2030, with 10 million annual sales by 2030 and the creation of around 50 million direct and indirect jobs by 2030.
India has established an objective to elevate the proportion of Electric Vehicle (EV) sales to 30% in private cars, 70% in commercial vehicles, 40% in buses, and 80% in two-wheelers and three-wheelers by 2030. This ambitious objective will be 80 million EVs on Indian roads by 2030. Additionally, India strives to produce complete domestic EVs through the ‘Make in India’ initiative.
The global electric vehicle market was valued at US$255.54 billion in 2023. By 2033, it is forecasted to reach approximately US$2,108.80 billion, growing at a significant CAGR of 23.42% from 2024 to 2033.
RECENT MARKET SURVEY
A recent survey reveals strong interest among Indian consumers in New Energy Vehicles (NEVs), with 83% of respondents indicating their readiness to choose NEVs exclusively for future purchases by the end of this decade.
On a state-wide level, Goa leads the country in EV penetration, with 14.20% of all new vehicles sold this year being electric. Tripura and Chandigarh follow. Delhi also stands out with a 10.72% penetration, reflecting the capital’s push towards sustainable urban mobility.
India’s electric vehicle market is anticipated to expand at a CAGR of 28.52%, reaching US$18.319 billion by 2029 from US$5.22 billion in 2024.
According to Fortune Business Insights, the Indian EV market is forecasted to expand from US$ 3.21 billion in 2022 to US$ 113.99 billion by 2029, with a 66.52% CAGR.
The Indian EV battery market is projected to surge from US$16.77 billion in 2023 to US$27.70 billion by 2028.
According to NITI Aayog and Rocky Mountain Institute (RMI), India’s EV finance industry will likely reach Rs. 3.7 lakh crore (US$ 50 billion) in 2030.
POLICY PUSH & PROSPECTS
The Indian government has set a target to achieve 30% electrification of the country’s vehicle fleet by 2030. It has introduced several incentives and policies to support the growth of the EV industry. The industry was given a major boost in the 2024 Union Budget for producing electric vehicles, adopting hydrogen fuel, and embracing changing technologies.
In the 2024 Union Budget, India’s Finance Minister announced a budget allocation of INR 35,000 crore (USD 3.5 billion) for crucial capital investments in achieving energy transition and net-zero targets by 2070 in line with India’s Paris Climate Goals. Furthermore, she stated that the government will support Battery Energy Storage Systems with a capacity of 4,000 MWH through viability gap funding.
For electric vehicle manufacturers, the government has already launched initiatives such as Faster Adoption of Manufacturing of Electric Vehicles Scheme – II (FAME – II) and Production Linked Incentive Scheme (PLI) allocating INR 51.72 billion (approximately $ 631 million) towards its FAME-II scheme, to subsidize and promote the adoption of clean energy vehicles, allocating an 80% increase in budget allocation versus previous years. In addition, reduced customs duty on Lithium-ion batteries used in electric vehicles and excise duty exemptions on natural gas and biogas could result in more foreign electric vehicles being imported to India.
INDIAN AND FOREIGN MANUFACTURERS & EV CHARGERS
Indian automobile manufacturers like Tata Motors and Mahindra & Mahindra mainly produce EVs for the Indian market. However, several international companies have recently entered the market. Among others, Swedish luxury carmaker Volvo Cars is exploring the possibility of a new electric vehicle manufacturing facility outside China in India.
Charging infrastructure is currently being expanded with investments from both government and private companies. It may be mentioned that EESL established the nation’s first EV charging plaza in July 2020, and in just one year, the number of charging stations has multiplied by five. This number looks small and would need large-scale uptake to trigger massive production of EVs as projected. For instance, the increasing popularity of EVs in the national capital territory (NCT) highlights the success of the Delhi EV Policy launched in 2020. In December 2022, EVs accounted for 17% of all vehicle sales in Delhi, marking a YoY growth of 86%
BRIGHT FUTURE OF EVs IN INDIA
With the Indian government’s push for sustainable mobility, the country’s electric vehicle market appears poised for significant growth. With supportive government policies, increasing consumer awareness, and technological advancements, India is well positioned to transition towards an eco-friendly mode of transportation. As demand for EV continues to grow, it also presents a tremendous opportunity for both the local and international companies to invest in and contribute to the growth of India’s EV ecosystem. India’s overall push toward electric vehicles (EVs) is targeted through both domestic manufacturing of large Indian automobile companies and large-scale imports from abroad by offering fiscal and monetary incentives.
This Post was submitted by Climate Scorecard India Country Manager Pooran Chandra Pandey.