India’s electric vehicle (EV) market is experiencing rapid growth, driven by government incentives, rising environmental awareness, and technological advancements. The Indian EV market was valued at USD 3.21 billion in 2022 and is projected to expand to USD 113.99 billion by 2029, demonstrating a compound annual growth rate (CAGR) of 66.52%. This remarkable growth is part of India’s broader goal to increase the share of EVs in the transportation sector significantly by 2030. Specifically, the country aims to elevate the proportion of EV sales to 30% in private cars, 70% in commercial vehicles, 40% in buses, and 80% in two-wheelers and three-wheelers.
In 2023, EV sales in India surged by 49.25%, reaching 1.52 million units. This growth was fueled by various government initiatives, such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, which aims to promote EV adoption through financial incentives and support for manufacturing. Additionally, the Indian EV battery market is expected to grow from USD 16.77 billion in 2023 to USD 27.70 billion by 2028, further supporting the sector’s expansion.
Several factors contribute to the growth of the Indian EV market. Firstly, India is emerging as a global hub for auto component sourcing, with the industry exporting over 25% of its production annually. This strong manufacturing base, coupled with the presence of a large pool of skilled and semi-skilled workforce, helps keep costs lower by 10-25% relative to operations in Europe and Latin America. Furthermore, the establishment of a robust and dependable EV infrastructure is crucial, with the necessity of setting up at least 1.32 million charging stations by 2030 to facilitate the rapid growth of EVs.
Several major players in the industry are making significant investments to improve EV infrastructure and accessibility. For example, Hyundai Motor intends to invest USD 2.45 billion in Tamil Nadu over the next decade to enhance its EV initiatives, including assembling EV battery packs and installing 100 charging stations. Similarly, in December 2023, under the FAME India Scheme phase II, the Ministry of Heavy Industries approved 7,432 EV charging stations for allocation to three Oil Marketing Companies (OMCs).
The growth of the EV market is also supported by the rise in electric vehicle registrations, which accounted for 6.4% of total vehicle sales in India as of early 2024. In January 2024, the total registrations of two-wheeler EVs surged to 81,344 units, with Ola Electric leading the market. The electric three-wheeler (e3W) auto market, excluding e-rickshaws, has also experienced substantial growth, driven by the goods sector for last-mile delivery and the expansion of e-commerce.
Additionally, numerous original equipment manufacturers (OEMs) are extending their reach to rural regions, further boosting the market. The electric vehicle market in states like Gujarat and Maharashtra is expanding rapidly due to robust demand and governmental backing. For instance, Gujarat’s EV landscape saw a 28% increase in sales in 2023 compared to the previous year.
India’s commitment to promoting electric mobility is evident through various policy supports and initiatives aimed at making the country a leading center for EV manufacturing globally. The government’s efforts include a dedicated policy, FAME II, with a budgetary outlay of USD 1.43 billion to incentivize EV consumption and support manufacturing, and 100% FDI allowed under the automatic route for the auto components sector. These policies, combined with increasing investments and technological advancements, position India to become one of the largest EV markets by 2030.
