In the commercial vehicle (CV) sector, there are four main categories: three-wheelers (3W), light commercial vehicles (LCVs), medium and heavy commercial vehicles (M&HCVs), and buses. These vehicles are used for different purposes, with 3Ws handling both passenger and cargo transport, LCVs and M&HCVs primarily serving the logistics industry, and buses focused on passenger transport. The 3W segment has seen a significant rise in electric vehicle (EV) penetration, driven by both new EV players and existing companies launching electric versions. On the other hand, the M&HCV segment has been the least affected by this trend, with very few EV models introduced so far. E-buses, largely adopted through government fleet electrification initiatives, have also seen new EV players entering the market alongside traditional manufacturers.
In the fiscal year 2024 (FY24), CV sales reached 1.8 million units, surpassing the pre-COVID levels of around 1.5 million units sold in FY20. The LCV segment recorded the highest sales. The market opportunity expanded from USD 19 billion in FY19 to USD 26 billion in FY24, reflecting an annual growth rate of 7%. Notably, 4-wheel truck sales accounted for 74% of the overall CV sales value in FY24.
Sales of electric commercial vehicles (E-CVs) saw remarkable growth in FY24, with 107,000 units sold, nearly three times the number sold in FY23. Annual sales are projected to exceed 800,000 units by FY30, growing at an annual rate of 40% from FY24 to FY30. Within this, the E3W segment is expected to grow fivefold, from around 100,000 units sold in FY24 to 500,000 units annually by FY30. E-LCVs are anticipated to make up 30% of total E-CV sales by FY30, while the sales penetration for E3W passenger and cargo vehicles is expected to reach 70% and 80%, respectively. E-LCVs are projected to achieve a 21% sales penetration, and E-Buses are expected to reach 30%. However, the E-M&HCV segment is forecasted to have the lowest penetration at about 5%.
The clean CV market opportunity grew from USD 0.5 billion in FY23 to USD 1.1 billion in FY24, driven primarily by E3W sales. This opportunity is expected to reach USD 14 billion by FY30, growing at around 52% annually from FY24 to FY30. As EV adoption increases and battery technology improves, EV prices are expected to decline. E3W prices are likely to align with internal combustion engine (ICE) 3W prices by FY30, while the price difference for E-LCVs will reduce to 45% from the current 65%. The price gaps for M&HCVs and buses will decrease but remain relatively high by FY30 due to the high cost of batteries required for these vehicles.
E-CVs are classified based on their carrying capacity and purpose, with categories including E3W, E-LCV, E-M&HCV, and E-Buses. The E3W segment, which includes cargo and passenger vehicles, is relatively well-represented with multiple original equipment manufacturers (OEMs) offering 30-40 different variants. In the E-LCV segment, which is still evolving, there are only 10-15 models available. Tata Motors is a key player in this segment, alongside pure-play EV companies like OSM and Switch. The E-M&HCV segment remains underserved with almost no OEM presence. In the E-Bus segment, vehicles are classified based on seating capacity, with Tata Motors being a key incumbent. Several pure-play EV companies like Switch, Olectra, and BYD are also present, though the market for E-Buses with more than 50 seats is underserved.
The E3W segment in India is expected to see substantial growth, with established players like Mahindra, Piaggio, and Bajaj expanding their E3W offerings. Mahindra is investing USD 120 million in Telangana, Piaggio is expanding its EV lineup, and Bajaj is investing USD 55 million in setting up E3W plants. Newer companies like Omega Seiki Mobility, Euler, and Alti Green Drive Electric are also making significant investments. In the E-LCV segment, recent vehicle introductions have generated significant pre-bookings, indicating strong market demand. Tata Motors plans to invest USD 245 million annually, focusing on E-LCV vehicles, while Switch plans to invest USD 150 million to increase its electric footprint. Pure-play EV companies are also making significant investments, with Jupiter Mobility planning to invest USD 25 million and Omega Seiki Mobility aiming to raise USD 200 million by CY25.
E-bus manufacturers are expanding their product range and strengthening domestic manufacturing capabilities in response to growing demand from state governments and private players. Companies like Switch and JBM are investing USD 146 million and USD 60 million, respectively, in E-Bus manufacturing.
Despite the higher initial investment, the total cost of ownership (TCO) for E-CVs is lower than that of ICE vehicles, thanks to lower energy consumption and insurance costs. However, challenges remain, including high upfront costs, range anxiety, limited public charging infrastructure, and a lack of financing options and awareness among fleet operators and drivers. Addressing these challenges will be crucial for the widespread adoption of E-CVs in India.
