India Electric Car Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024-2030)

India Electric Car Market Trends & Drivers

Government Schemes and Subsidies Boost Market Growth

• Government schemes and subsidies are playing a major role in the production and sales growth of EVs. In April 2015, the FAME India scheme was launched for promoting the adoption of hybrid and EVs in the country. Then, in April 2019, the FAME-II scheme was launched with a budget outlay of USD 1.3 billion (INR 10,000 crore), to support 55,000 e-passenger vehicles and charging stations.
• The government has extended the scheme till 2024, as announced in Union Budget 2022–23. With an emphasis on offering affordable and environment-friendly public transportation to the masses, the scheme, in regard to three- and four-wheelers, is applicable mainly to vehicles registered for commercial purposes or public transport. Owing to the additional incentives at the state level, Karnataka, followed by Tamil Nadu, Maharashtra, Rajasthan, and Delhi, leads in the number of beneficiaries under the scheme.
• Furthermore, in May 2021, the government launched the Production-Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage Manufacturing, to incentivize the domestic production of batteries and diminish the dependence on imports. This will further support the EV industry with the vital infrastructure and significantly cause a plunge in the cost of electric cars.

Growing Environmental Concerns

• On the Environmental Pollution Index (EPI) 2022, India is at the bottom in the environmental health category, ranking 180 out of 180 as far as air quality is concerned. The ultra-fine particulate matter (PM2.5), which has a diameter of less than 2.5 micrometers, emitted by road vehicles, is harmful. Its concentration in the air has increased over the past decades, leading to around 1,640,000 deaths annually. To reduce air pollution, the government has decided to shift from conventional fuel-based vehicles to electric vehicles, in addition to implementing several stringent norms.
• India is currently following Bharat Stage VI (BS VI) norms, skipping BS V. The government decided to go directly from BS IV to BS VI fuel standards due to the rampant environmental degradation, growing pollution level, and health hazards caused by the vehicular pollution. This is a step toward a more-sustainable and cleaner environment. It is expected to result in an increase in the demand for electric vehicles, thus reducing the usage of conventional fuel-based vehicles. With BS VI coming into effect, India has come at parity in the automotive market with the U.S. and other developed European countries across the globe. Such initiatives are likely to spur the growth of the electric car market in India.

High Upfront Cost

• The popularity of electric cars has risen over the years, as they are eco-friendly. Their sales growth, however, is still a problem. The end user chooses the product on the basis of its cost to buy and run or how it performs. And, in a country such as India, where people are cost-conscious, the high upfront cost of electric cars is one of the major restraints for the market growth. Electric cars are expensive, particularly because of the battery.
• Today, prices are about USD 250/kWh globally, which, after excluding import duties, comes to USD 883,000 (INR 5.7 lakh). Even with a 2% interest rate and eight-year life span, rationalizing the battery costs on per kilometer savings alone means one would have to drive over 25,000 km per year, making it feasible, but not for everyone. However, with the projected decline in the battery prices to USD 100/kWh in the coming years, the electric car market could grow significantly during the forecast period.

India Electric Car Industry Outlook

Technology Analysis

• The BEV category accounted for the largest share, of around 45%, in the Indian electric car market in 2023, and it is projected to maintain its dominance in the coming years. This is primarily imputable to the snowballing preference of consumers for EVs over ICE vehicles and limitations on vehicular CO2 emissions.
• In addition to this, the higher subsidies offered by the government on the purchase of BEVs as compared to PHEVs and HEVs, coupled with the dwindling battery price and availability of many BEV models, drive the sales expansion.

The technologies covered in the report are:

• BEVs (Largest and Fastest-Growing Category)
• PHEVs
• HEVs

Product Insights

• The sport utility vehicles (SUVs) category is projected to grow at the highest CAGR, of 56.4%, during 2024–2030, owing to the rise in the disposable income of the citizens and the increase in the demand for premium cars across the country. Therefore, several manufacturers are focusing on launching SUVs to expand their sales and achieve a huge customer base.
• For instance, in July 2022, Mahindra & Mahindra Ltd. and British International Investment agreed to invest up to USD 250 million each in a new EV manufacturing facility, which is to have a valuation of USD 9.1 billion, to broaden the sales of its electric SUVs.
• Additionally, many international companies are introducing new vehicles in India, with the objective of diversifying their geographical presence and improving their business performance. For instance, in October 2022, BYD India Private Limited launched Atto 3 electric SUV, which has been designed to take on the likes of Tesla, by offering better driving comfort.
• Similarly, in July 2022, Sweden’s AB Volvo debuted its electric compact, SUV XC40 Recharge, in the country.

During the study, we have analyzed the following product types in the report:

• Hatchbacks (Largest Category)
• Sedans
• SUVs (Fastest-Growing Category)
• Others

Battery Analysis

• The lithium–iron phosphate (LFP) category accounted for the largest share, of around 40% in 2023, and it is projected to retain its position in the long run. This is primarily because of the longer life and lower costs of LFP batteries.
• Moreover, their supply chain is more stable compared to that of others, and they are also environmentally safe. Further, they have a low discharge rate, offer more charge cycles, and witness less heating.

Below are the major battery types used in the electric cars available in India:

• LFP (Largest Category)
• Li–NMC (Fastest Category)
• Others

End User Analysis

• The personal users category dominated the market in the historical years, and it is expected to continue having the largest share in the coming years, owing to the rising disposable income of the citizens and increasing affordability of these cars. In December 2021, the government formed a new section, 80EEB loan tax relief, which exempts EV owners from paying taxes, to promote the use of green automobiles.

The end users covered in the report are:

• Shared Mobility Providers
• Government Organizations
• Personal Users (Largest and Fastest-Growing Category)
• Others

Geographical Insights

• Uttar Pradesh led the market in 2023 due to being home to the largest customer base and a large number of suppliers across the EV value chain. In October 2022, the state cabinet approved the new EV policy, called Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy 2022, to benefit not only personal vehicles but also commercial vehicles. The government will provide a complete waiver of registration fees and road tax for vehicles bought and registered in the state.
• Maharashtra is expected to witness a significant growth rate over the forecast period. In July 2021, with the goal to augment the adoption of EVs, the state government rolled out a comprehensive policy under which the maximum incentive was capped at USD 2,029.1 (INR 1.50 lakh), and buyers were also made eligible for early-bird incentives.
• Pune (especially Pimpri–Chinchwad), Mumbai, and Nagpur have recorded the highest EV sales in the state during the past few months. Among the new registrations are cars, particularly SUVs with a range of 300 km on a single (full) charge, which is adequate for both intra-city and intercity travel.
• Similarly, in Mumbai, over 100 housing societies have deployed EV charging stations with a subsidized price of USD 0.07 (INR 5.50) per unit, which is quite less than the standard residential power prices. Further, 1,500 additional EV charging stations are being planned for the city, and the government has sought to ensure that 10% of the new automobile registrations are EVs by 2025.

The states analyzed for this report include:

• Uttar Pradesh (Largest Market)
• Maharashtra (Fastest Market)
• Gujarat
• Delhi
• Karnataka
• Tamil Nadu
• Rest of India

Competitive Analysis

The Indian electric car market is highly consolidated, with few players offering these automobiles. At present, Mahindra Electric Mobility Limited has the most offerings in the market. The company had ventured into the electric car industry much earlier than other Indian automotive players, through the acquisition of Reva Electric Car Company in 2010. Moreover, buoyed by the Indian government’s initiatives, such as incentives and favorable policies, to boost EV adoption, other OEMs are also entering India’s electric car industry.

India Electric Car Market News

• MG Motors plans to launch MG 4 EV in India in April 2024, at an ex-showroom price of INR 30 lakh.
• Mercedez-Benz Group AG will tentatively launch the INR 60-lakh EQA in India in May 2024.
• Hyundai Motor Company’s Kona Electric 2024 is planned for launch at an ex-showroom price of INR 25 lakh in May 2024.