Charting India’s Course: Navigating the Electric Vehicle Landscape in 2024

India, a critical player in the global automotive industry, has turned its attention to moving over to alternative fuels to reduce pollution after expanding its consumer and vehicle bases and adding local manufacturing facilities in the last two decades. In 2024, this journey will be crucial for the country, the world’s third-largest automotive market, as it grapples with the challenges of providing accessible growth capital to late-stage startups and attempts to attract Tesla and other foreign EV manufacturers to its domestic market.

EVs’ performance in 2023
In 2023, India, the world’s largest two- and three-wheeler manufacturer, sold nearly 24 million vehicles, including commercial and personal four-, three- and two-wheelers, per government data from the Vahan portal. Of the total registered vehicles, over 1.5 million were EVs, capturing 6.35% of the total base, with 813,000 electric two-wheelers. While overall growth was nearly 10% from about 22 million vehicles sold in 2022, EV sales grew by almost 47% from 1.03 million in 2022, bringing the total number of electric vehicle sales to nearly 3.5 million. Two-wheelers accounted for over 47% of sales, while four-wheelers represented around 8%, and the remainder came from e-rickshaws and three-wheelers.

India’s EV sales grew from almost 125,000 in 2020 to over 1.5 million in 2023, according to Vahan data. The annual growth in EV sales in 2023, while significant, was not as high as in the previous two years, when it was over 209% in 2022 and 166% in 2021. One reason for the drop in EV sales was the reduction in subsidies given to two-wheeler customers through the FAME-II incentive scheme, causing a decrease in monthly sales of electric two-wheelers by over 56% in June alone.

The sudden drop in electric two-wheeler sales has had an impact on the country’s overall EV market, as India is predominantly a two-wheeler market with limited manufacturers in the electric car segment. The top four market players, Ola, TVS Motor, Ather Energy, and Bajaj, which combined had about 26% to 27% of the market nine months ago, now capture about 80% of the total electric two-wheeler market. Ather Energy sold an average of about 80,000 to 85,000 units this year and expects a similar sales figure for 2024.

Moreover, the Indian government has offered a $3.11 billion production-linked incentive scheme to attract investments and promote domestic manufacturing of automobiles and auto components in the country. Tata Motors and Mahindra & Mahindra have emerged as the early beneficiaries of the incentive scheme, with Tata Motors seeing a 63% growth in EVs and an increased EV penetration in its portfolio to 12% this year.

Despite the challenges, India’s EV market shows significant potential for growth, with a growing trend of premiumization and burgeoning sales in tier two and tier three towns, particularly in the electric two-wheeler market. Commercial use cases, such as three-wheeler cargo and passenger vehicles, food delivery, and hyperlocal delivery, also present a lucrative opportunity for investors, with the commercial segment less likely to be impacted by subsidy changes and showing clearer economic viability.

Author photo
Publication date:
Author: admin