Amid the global shift towards sustainability, the electric vehicle (EV) market is rapidly advancing, becoming a crucial component of the automotive landscape. This is especially true in India, where significant government initiatives and increasing environmental awareness are driving substantial growth. The Indian government has set ambitious targets to transform its transportation system, aiming for 30% of private cars, 70% of commercial vehicles, 40% of buses, and 80% of two and three-wheelers to be electric by 2030.
Globally, the electric vehicle market was valued at US$ 255.54 billion in 2023 and is forecasted to reach approximately US$ 2,108.80 billion by 2033, growing at a significant compound annual growth rate (CAGR) of 23.42% from 2024 to 2033 as per IBEF Report on EV. In India, the electric vehicle sector is experiencing rapid growth, fueled by government incentives, rising environmental concerns, and technological advancements. With initiatives like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, India aims to significantly increase EV adoption. According to Fortune Business Insights, the Indian EV market is projected to grow from US$ 3.21 billion in 2022 to US$ 113.99 billion by 2029, with a 66.52% CAGR. In 2023, electric vehicle sales in India surged by 49.25%, reaching 1.52 million units. The country aims to have 80 million EVs on its roads by 2030, a goal set by the Confederation of Indian Industry (CII).
The global push towards electric vehicles is creating new opportunities for automotive suppliers. The Indian EV battery market is projected to surge from US$ 16.77 billion in 2023 to US$ 27.70 billion by 2028. The focus is on establishing a reliable infrastructure and ensuring affordable home charging solutions. The dynamic nature of the industry is highlighted by the presence of over 700 electric vehicle startups in India.
Technological advancements are at the forefront of this revolution. The EV startups are innovating in the electric mobility space, contributing to a robust ecosystem that supports a wide range of electric vehicles, from two-wheelers and three-wheelers to commercial buses and trucks. The vehicles are becoming more accessible and affordable, thanks to economies of scale and government subsidies under schemes like FAME.
India’s strategic approach includes substantial financial incentives for both manufacturers and consumers. The FAME II scheme, with a budgetary allocation of US$ 1.43 billion, aims to support the electrification of public and shared transport. Policies are also in place to attract foreign direct investment (FDI). This is evident from international companies like Hyundai and Tata making significant contributions to India’s EV landscape.
The infrastructure for electric vehicles is expanding rapidly. As of early 2024, there are over 12,000 operational public EV charging stations across India, with plans to significantly increase this number to meet the growing demand. This expansion is crucial in addressing the range anxiety associated with electric vehicles, making them a more viable option for the average consumer.
The automobile sector received a cumulative equity FDI inflow of about US$ 35.65 billion between April 2000 and December 2023. With the launch of the “Make in India” initiative, the government is expected to stimulate substantial investment in the auto components sector. Ola Electric is set to be the first auto company in India to launch an IPO in over two decades, with an expected size of ₹8,500 crore (US$ 1.01 billion). To meet India’s EV ambitions by 2030, a cumulative investment of approximately ₹12.5 lakh crore (US$ 180 billion) in vehicle production and charging infrastructure will be required.
Vietnamese automaker VinFast has reached an agreement to establish an EV manufacturing facility in Tamil Nadu with an investment of up to US$ 2 billion. Tata Motors also signed an agreement with the Tamil Nadu government in March 2024 to establish a vehicle manufacturing facility in Ranipet, with an investment of US$ 1.08 billion, generating over 5,000 job opportunities over five years. Hyundai Motor plans to invest US$ 2.45 billion in Tamil Nadu over the next decade to enhance its electric vehicle initiatives. Kia announced plans to expand its production capacity, sales network, and product range in India, including investing ₹2,000 crore over four years.
Market trends indicate a shift towards personal mobility due to rising fuel costs and growing environmental consciousness. Electric two-wheelers have seen a dramatic increase in sales, highlighting the public’s readiness to embrace cleaner technologies. Companies like Ola Electric, a leader in patent publications for EV technologies, underscore the innovative progress within the industry.
Despite challenges, the outlook for the electric vehicle sector in India is overwhelmingly positive. Government support, technological innovation, and consumer acceptance are driving the country towards a greener future. With continued investment and strategic policy implementation, India is well on its way to becoming a global leader in electric mobility.
