The India electric vehicle market size is 11.36 billion in 2024 and is projected to hit around USD 1,053.10 billion by 2034, expanding at a CAGR of 57.3% between 2024 to 2034.
Market Key Takeaways
- By Propulsion, the battery-electric vehicle segment is expected to acquire the largest share of the market during the forecast period.
- By Platform, the four-wheeler segment contributed more than 58% of revenue share in 2023.
- By Platform, the two-wheeler is the fastest growing segment of the India electric vehicle market.
- By vehicle type, the passenger vehicle segment held the largest share of the market in 2023, the segment is expected to sustain the growth during the forecast period.
Market Overview
The electric vehicle market refers to the segment of the automotive industry that focuses on the production, sale, and adoption of electric vehicles. Electric vehicles are automobiles that are powered, either fully or partially, by electricity, as opposed to traditional internal combustion engines that run on fossil fuels like gasoline or diesel. India’s electric vehicle (EV) market is experiencing significant growth and grasping increasing attention from manufacturers, investors, and the government. The Indian government has already set ambitious targets to promote electric mobility and reduce pollution, making it one of the world’s most promising markets for electric vehicles. Several states had also introduced additional policies to encourage the use of electric vehicles, such as waiving road tax and providing additional financial incentives.
Both domestic and international automobile manufacturers had shown interest in the Indian EV market. Major players like Tata Motors, Mahindra & Mahindra, and Hero Electric had introduced electric vehicles, and global companies like Tesla aims to test its potential in the nation’s rapidly growing electric vehicle market.
Electric vehicles produce lower or zero tailpipe emissions, reducing their environmental impact compared to traditional fossil-fuel-powered vehicles. They are seen as a cleaner and more sustainable alternative. Improvements in battery technology have led to increased driving ranges and reduced charging times for electric vehicles, making them more practical for everyday use. The Indian government had launched various initiatives and incentives to promote the adoption of electric vehicles. These measures included subsidies, tax incentives, and reduced goods and services tax (GST) rates on EVs. Growing public awareness of environmental issues and climate change has contributed to increased interest and acceptance of electric vehicles.
Report Highlights:
- By propulsion, the battery electric vehicles segment holds the largest share of the market. Battery electric vehicles produce zero tailpipe emissions, making them an attractive choice for environmentally conscious consumers and governments aiming to reduce air pollution and combat climate change.
- By platform, the four-wheeler segment is expected to have a significant share of the market throughout the forecast period. Four-wheelers, particularly electric cars, have been more widely accepted and preferred by consumers for personal transportation. Consumers often associate four-wheelers with safety, comfort, and convenience, making them a popular choice for everyday use.
- By vehicle type, the passenger vehicle segment is observed to hold the dominating share of the market during the forecast period. The availability of a wide range of passenger vehicle models in the country by multiple nation-based automakers promotes the growth of the segment.
Market dynamics:
Driver: Rising emphasis on reducing air pollution
Many Indian cities suffer from severe air pollution, especially during peak traffic hours. The increasing number of vehicles on the road is a major contributor to this problem. Promoting electric vehicles helps to improve urban air quality, making cities healthier and more livable for their residents. The Indian government has implemented regulations and policies to tackle air pollution, including emission norms for vehicles. Encouraging the adoption of electric vehicles aligns with these policies, and government agencies often provide financial incentives like subsidies, tax benefits, and reduced registration fees to promote EV usage. As people become more environmentally conscious, there is a growing interest in electric vehicles as a cleaner and more sustainable transportation option. Thus, the rising emphasis on reducing air pollution acts as a driver for the India electric vehicle market.
Restraint: Consumer affordability
Electric vehicles generally have higher upfront costs compared to traditional internal combustion engine vehicles. The cost of EV batteries, which is a major component of the vehicle’s price, remains relatively high. This price difference can be a deterrent for price-sensitive consumers, especially in a price-sensitive market like India. Many consumers in India rely on financing options to purchase vehicles. However, the availability of attractive and accessible financing options for electric vehicles is limited, making it difficult for potential buyers to afford an EV without a substantial down payment. Thus, the consumer affordability factor creates a restraint for the market.
Opportunity: Rising development of domestic battery manufacturing plants
India is currently focused on developing domestic battery production plants that will reduce dependence on foreign suppliers and enhance energy security. Domestic battery production plants enable economies of scale and mass production of batteries. As production volumes increase, the cost per unit decreases, making electric vehicles more price-competitive in the market. Local battery production facilities allow for customization and innovation to meet the specific needs of the Indian market. Tailoring battery technology to suit regional requirements can lead to better-performing and more efficient electric vehicles. All these factors collectively create an opportunity for the market.
Challenge: Inadequate policy implementation
Inconsistent or poorly implemented policies create uncertainty for electric vehicle manufacturers and investors. They may hesitate to make long-term commitments and investments in the EV sector if they are unsure about the government’s commitment to supporting the industry. When incentives and subsidies are not implemented effectively, they may not provide the desired boost to the EV market. Delays in disbursing incentives or limited accessibility can reduce the effectiveness of these measures in encouraging consumers to switch to electric vehicles. The success of EV policies also depends on consumer awareness and education.
Inadequate efforts in promoting electric vehicles and their benefits can lead to limited public interest and slower adoption rates. Thus, the inadequate policy implementation is observed to create a challenge for the market.
India Electric Vehicle Market Companies
The electric vehicle market in India is fragmented with multiple potential manufacturers/companies that are actively participated in the development, innovation, manufacturing and distribution of electric vehicles. Major key players in the India electric vehicle market are-
- Ather Energy Pvt Limited
- JBM Auto Limited
- Bajaj
- Mahindra Electric Mobility Limited
- Ola
- TVS
- Electrotherm
Recent Developments:
- In July 2023, Tesla representatives stepped up for its new manufacturing plant for electric vehicles in India, while having a conversation with the commerce minister this month. The world’s leading automotive company aims to create a manufacturing plant to offer electric vehicles at 25% cheaper rate than its current offering. In May 2023, Tesla executives visited India to establish the manufacturing base for cars and batteries in India.
- In July 2023, Maruti Suzuki announced to launch its Maruti Suzuki Brezza EV in Indian market. The electric car is observed to challenge many other manufacturers as it can have an extensive range of 550 kilometers with a 60 kilowatts battery pack. The electric car also aims to have Apple CarPlay and Android Auto touchscreen infotainment system.
- In July 2023, based in Madhya Pradesh, Enigma Automobiles announced the launch of its new Ambier N8 electric scooter at the price of Rs.1,08 Lakh. According to the company, the scooter offers 200 kms of range with a single charge and gets fully charged within 2-4 hours.
Segments Covered in the Report:
By Propulsion Type
- Battery electric vehicle
- Hybrid electric vehicle
By Platform
- Two-wheeler
- Three-wheeler
- Four-wheeler
By Vehicle Type
- Passenger Vehicles
- Commercial Vehicles
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