The indian electric vehicles (EV) market size was valued at USD 8,674.45 million in 2022 and is projected to reach a value of USD 23,514.54 million by 2031, registering a CAGR of 23.47% during the forecast period 2023-2031.
An Electric Vehicle (EV), otherwise battery electric vehicle (BEV), in simple terms, is a vehicle that runs on electric motors. EV is a possible alternative to the current automobile that uses gasoline and diesel, which emits a considerable amount of CO2, which is harmful to nature. Throughout the forecast period, market growth is anticipated to be fueled by the attractive incentives being offered by the Indian government on the production and purchase of electric vehicles to promote the adoption of electric vehicles. An important factor driving the electric vehicle market in India is the post-lockdown sale of pure and hybrid electric vehicles. The government's strict greenhouse gas (GHG) emission norms, such as the Bharat Stage (BS) VI emission standards adopted by India's Ministry of Road Transport and Highways (MoRTH), are also anticipated to contribute to the market's expansion significantly.
Electric Vehicles depend on one or more electric motors for propulsion. These vehicles are not just eco-friendly but cost-effective options than petrol-based vehicles. They usually run on lithium-ion batteries, which have exceptional longevity and good power of retaining energy. Governments worldwide are making efforts to increase the use of these vehicles to curb pollution. The Indian EV market is divided by vehicle type, power source type battery, and region.
By 2030, it is anticipated that 50% of the population will live in urban areas. India is one of the emerging economies, and there are many villages and underdeveloped regions in India. Like metropolitan cities such as Mumbai, Pune, New Delhi, Kolkata, Bengaluru, etc., the government is trying to evolve the rural cities by developing improved infrastructure, transport, healthcare, and more. With these facilities comes the introduction of advanced technologies, and this idea of urbanization invites the need for EVs.
The need to control the emission of ozone-depleting gases, reduce fuel imports, and the ever-increasing energy cost are other driving factors of the EV market. Around 98 cities have been nominated for the Smart City Mission 2015. It is an urban development program launched by the Government of India. Many cities under this mission have already embraced the use of these vehicles. The demand from these cities will spike in the years to come.
The Indian market for electric two-wheelers is highly competitive. Numerous local and regional players have taken over the market. They are accelerating the adoption of electric vehicles by providing two-wheeler EVs that are competitive with conventional vehicles in terms of price, power, and convenience, giving consumers a wide range of options.
High Costs of EVs
Electric vehicles are expensive as compared to conventional transport options. This is because of the expensive, compact-sized lithium batteries they operate on. These batteries are almost equal to the fuel prices in India. These high costs are also because of India's lack of lithium-ion battery manufacturing units.
India heavily relies on imports for raw materials to make these batteries, and lithium and cobalt are the minerals India imports primarily from China. Moreover, many EV companies in India function with less than 50% localization. Hence, they cannot avail themselves of the benefits and subsidies under the FAME (Faster Manufacturing and Adoption of Hybrid and Electric Vehicles) phase two. All these factors contribute to the increased prices of these vehicles, holding back the market.
India is the second most populated country in the world. The Indian population is mainly dependent on petrol-based vehicles for transport. The rising need to curb the emission of petrol-depleting gases has caused the world to shift towards electric vehicle technologies. The Indian government has undertaken efforts to promote these vehicles operating on electric power. It has adopted specific schemes under the mission of promoting clean energy vehicles. It is under phase two of the FAME scheme launched in 2019.
The state and the central government provide subsidies and incentives to EV owners under this scheme. For example, an EV owner can avail of an exemption of over INR 1 Lakh while paying off the loan to purchase the vehicle. Both the two-wheeler and four-wheeler purchasers are benefited from this exemption. This has attracted salary-earning individuals to become prospective customers.
The Goods and Service Tax on these vehicles' purchases was also reduced to 5% a few years before. Many states in the country exempt road fees for EV owners under the EV policy. The introduction of e-buses by various state governments has contributed substantially to the growth of the Indian EV market. It is predicted to rise in the upcoming years with plans to increase the prominence of these EVs in public transport.
The Indian Electric Vehicle (EV) market is segmented by vehicle type, application, and region.
Based on the vehicle type, the Indian EV market is categorized into Passenger Cars, Commercial Vehicles, Two Wheelers, and Three-wheelers.
Two-wheelers are the most popular option as they are cheaper than cars and comfortable for shorter distances. Followed by that are the three-wheelers, which acquired almost 45% market share in 2021.
The country's ongoing adoption of electric light-duty commercial trucks and electric buses is responsible for the commercial segment's expansion. Electric buses are already gaining popularity due to the government's aggressive plans to increase the number of electric vehicles on the road to reduce vehicle pollution in the nation's major cities. Electric buses and light-duty commercial vehicles are already available in the nation from businesses like Tata Motors, Mahindra and Mahindra Ltd., and Electra Greentech Limited.
Over the forecast period, the passenger car segment is anticipated to post a sizable CAGR. Due to growing government investments in EV infrastructure and tax incentives provided to consumers, the market for diesel and gasoline-powered passenger vehicles is transitioning from diesel and gasoline-powered vehicles to electric passenger vehicles. For instance, the National Electric Mobility Mission Plan (NEMMP) 2020 of the Indian government aims to achieve national fuel security while encouraging the adoption of hybrid and electric vehicles.
Another way of market segmentation is by the power source, divided into electric vehicles, plug-in electric vehicles, and hybrid electric vehicles.
Depending on the region, the market is analyzed in North India, South India, and North East India. North India dominates the market.
North India has the largest market in the country, where New Delhi is a prominent EV market in India and is rising to become the EV capital of India. The factors contributing to the market's growth are subsidies, ample charging stations, increasing use of these vehicles in public transport, rising environmental concerns, etc.
According to the FAME phase two, Maharashtra has made critical amendments to its EV policy. It intends to sore the market demand, effortlessly obtain raw materials, and merge the vehicles in public and private transport. It also aims at increasing EV registrations by the end of the forecast period. The government seeks to convert 25% of its public transport into clean energy vehicles.
The e-commerce business readily adopts these automobiles into their logistics department and focuses on more than 20% of their fleet conversion into electric. All these reasons are creating a demand for EVs in Maharashtra and further enlarging the market in the region.
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In August 2022, Toyota Motors announced that it would invest INR 3,600 crores in the Bidai facility in Karnataka to produce hybrid vehicles. Additionally, the investment plan was disclosed following the State government's decision to begin hybrid vehicle production.
In May 2022, The Honda City e-HEV was unveiled by Honda Cars India Limited in India. The new Honda City: HEV is the first widely available vehicle to feature Strong Hybrid Electric technology. It is based on the ZX variant of the fifth-generation City. Another first for the company, The City e: HEV, will be produced in India at HCIL's facility in Tapukara, Rajasthan.
In August 2022, Zor Grand, a brand-new electric three-wheel cargo vehicle, was introduced by Mahindra Electric Mobility Limited (MEML). For improved fleet management and operational efficiency, the new car has NEMO connected vehicle platform. On a single charge, the car can travel 100 kilometers.
In August 2022, In India, the PURE EV unveiled the Etryst350 electric motorcycle for INR 155,000. A 3.5 kWh lithium-ion battery powers the Etryst350, which has a top speed of up to 85Kmph. The car can travel up to 140 kilometers on a single charge.
In October 2022, As the nation strives to obtain 50% of its installed electricity capacity from non-fossil sources by 2030, MG Motor India and its consortium members launched the fourth edition of their Developer Program and Grant (MGDP) to accelerate, mentor, and incubate innovative Indian startups in the field of electric mobility.
"Find new revenue generation opportunities"