How the EV Revolution in India Has Evolved and What’s Next?

India has seen an incredible transformation in the electric vehicle (EV) sector over the past few years. With increasing demand, government support, and a growing network of manufacturers, the EV revolution in India is going full scale. The EV market is becoming an increasingly attractive investment for automakers, consumers, and investors alike.

India’s EV market achieved a significant milestone in 2024. According to data from the Ministry of Road Transport and Highways (MoRTH), the total sales of electric vehicles surged by 26.5% year-on-year, reaching 1.94 million units by December 29, 2024. This includes strong performances across all segments except for heavy goods vehicles. Notably, October 2024 saw the best-ever monthly sales, with 219,548 EVs sold, demonstrating the increasing consumer interest and market confidence.

Government Initiatives to Drive EV Adoption

India’s government has taken several measures to accelerate the EV revolution in India. The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, launched in 2015, has been a flagship initiative. The second phase, FAME-II, was introduced in 2019, with a budget of INR 10,000 crores. This initiative provides incentives for EV manufacturers and buyers alike, with subsidies aimed at two-wheelers, three-wheelers, four-wheelers, and electric buses.

The Phased Manufacturing Program (PMP) is another critical initiative designed to gradually increase local production of EV components in India. This roadmap aims to build the nation’s manufacturing capabilities for EVs, sub-assemblies, and their components, ensuring that the country does not remain overly dependent on imports.

After FAME, the government replaced it with the PM E-DRIVE scheme, with INR 36.79 billion in incentives aimed at promoting battery-powered vehicles. This scheme is expected to benefit electric two-wheelers, three-wheelers, and public transport vehicles, while boosting the manufacturing sector.

Rising Stock Prices: A Strong Evidence of EV Market Growth

According to a report from Smallcase, Indian companies involved in electric vehicles and related components have experienced impressive stock growth over the last 5 years. Notable examples include Amara Raja Energy & Mobility Limited, which saw a growth of 27%, Exide Industries Limited with 71.52%, Hero MotoCorp Ltd at 63.53%, Maruti Suzuki India Ltd at 67.77%. Mahindra & Mahindra Ltd clocked an astounding 389.64% growth. Motherson Sumi Wiring India Ltd witnessed 23.71% growth, and Graphite India Ltd stands at a solid 56.48% growth.

The highest performing stocks were from companies like JBM Auto Ltd, which surged by 1225.22%, Himadri Speciality Chemical Ltd at 600.73%, Servotech Renewable Power System Ltd with an incredible 5360.08%, and KPIT Technologies at 1186.07%. These stock performance in the last 5 years has shown the rapid EV revolution in India.

Challenges Hindering The Full-Scale EV Evolution

Despite the rapid progress, there are several hurdles that still impede the full-scale adoption of EVs in India.

• High Upfront Cost: While EVs offer lower running costs compared to ICE vehicles (as low as 1 rupee per kilometer), the upfront cost remains a significant barrier. The higher initial price, driven by the cost of batteries and advanced technology, is often prohibitive for many consumers. Most Indian buyers are not willing to invest in the high upfront cost unless they can achieve substantial savings over the long term.

• Charging Infrastructure: One of the major concerns holding back the EV revolution in India is the lack of accessible charging infrastructure. The availability of charging stations remains limited, particularly in non-metro cities and rural areas. Moreover, the long charging times and high installation costs of chargers add to the inconvenience. While private companies like Tata Power and state-run companies are investing in building charging stations, the overall pace is still slower than required to match the increasing demand for EVs.

• Range Anxiety: Despite advancements in battery technology, many consumers still fear the limited range of EVs and the lack of charging infrastructure. Range anxiety is another hinder for the EV revolution in India. The idea of running out of charge with no nearby charging station is a significant deterrent for potential buyers, especially those who rely on their vehicles for long-distance travel.

What’s Next for India’s EV Industry?

India’s EV market is on the cusp of a breakthrough. With rising government support, increasing investments, and the entry of global players like VinFast, the future looks promising. The Vietnamese automaker’s commitment to investing up to USD 2 billion in India is indicative of the growing global interest in the Indian market.

In fact, the Economic Survey 2022-23 predicts India’s EV market will grow at a Compound Annual Growth Rate (CAGR) of 49% between 2022 and 2030, with annual sales expected to reach 10 million units by 2030. This growth is expected to generate 50 million direct and indirect jobs in the sector, further fueling economic growth.

In the coming years, we can expect:

• Improved Battery Technology: EVs will be made more affordable for consumers as battery costs are expected to continue decreasing. Moreover, the development of faster-charging batteries will address one of the major pain points for Indian EV owners.

• Enhanced Charging Infrastructure: The government’s push for establishing a robust EV charging network, along with private sector investments, will make it easier for consumers to adopt EVs. The goal is to have an adequate charging station network in place. This will make EVs as convenient as petrol and diesel cars.

• Increased Consumer Awareness: With more EVs on the road and government-backed awareness campaigns, consumers will become more educated about the benefits of electric vehicles, ultimately driving adoption.

• Government Support: The continued evolution of the FAME scheme and other incentives will provide critical support to the growing EV ecosystem. Policies that promote local manufacturing and innovation will create a sustainable and self-reliant EV industry.

• Greater Variety and Affordability: As more manufacturers enter the market, there will be an increasing variety of electric vehicles at different price points. This will cater to a wider range of customers, from budget-conscious buyers to those seeking luxury EVs.

Conclusion

The EV revolution in India has come a long way, and it is far from over. With a combination of government policies, innovation in EV technology, and increased public awareness, India is poised for a sustainable future in electric mobility. However, challenges such as affordability, charging infrastructure, and consumer education remain obstacles that must be addressed.

India’s EV industry is on the path to becoming a global leader in electric mobility, and with sustained efforts, the dream of an EV-powered India is within reach.