In 2023, the EV market in India achieved remarkable growth and breakthroughs. The factors for such achievements are rising fuel prices, worsening air pollution in cities, and the government’s push towards electrification of vehicles, EVs are gaining momentum in the Indian automotive industry.
The goal to advance the growth of EVs has been made a concrete aim due to the participation of both government and private players
- Affordable EVs under Rs 10 Lakhs
One of the major obstacles to mass EV adoption was the high upfront cost. To make EVs more affordable, several automakers like Tata Motors, Mahindra & Mahindra, and Hyundai Motor India launched new EV models priced under Rs 10 lakhs in 2023. For instance, Tata Motors launched the Tiago EV in February 2023 at just Rs 8.49 lakhs for the base variant and Rs. 9.49 lakhs for the top variant, making it the most affordable EV in India. Such affordable models have made EVs attainable for middle-class Indian consumers. According to industry estimates, the under Rs 10 lakh price segment witnessed a huge 28% growth in EV sales in 2023.
The Tata Nexon EV 2023 launched in October 2023 and offered a range of 506 km on a single charge, along with a fast-charging option that could charge the battery from 0 to 80% in 60 minutes. Tata Nexon EV 2023 also became one of the best-selling electric cars in India, with over 50,000 units sold by the end of 2023.
Europe was the largest EV market in 2020, with over 1.4 million new registrations and a 10.2% sales share. Norway had the highest EV penetration in the world, with 75% of new car sales being electric in 20201. Other leading markets in Europe included Iceland (45%), Sweden (32%), the Netherlands (25%), and France (11%)
- Expansion of Charging Infrastructure
The limited availability of EV charging stations leading to range anxiety was another roadblock. In 2023, the central and state governments collaborated with private companies like Tata Power, Adani Electricity, and NTPC to install thousands of new electric charging stations. Leading highways like the Delhi-Jaipur highway have Supercharger stations every 100 km. Metro cities like Delhi, Mumbai, Bengaluru, and Hyderabad have fast chargers at most metro stations, malls, office complexes, and residential apartments. The Doyle Research Consultancy reported a 45% increase in the number of EV charging outlets in India in 2023. Consequently, range anxiety has greatly reduced.
- Entry of New Players
The high growth potential of EVs in India attracted several new players to foray into the market in 2023. MG Motor India launched MG ZS EV in January 2023. Polestar, a joint venture between Volvo and Geely, announced its entry into India with Polestar 3 launch in mid-2024.
- Increased Localization
One-way automakers reduced EV costs was through increased localization of components. Rather than just rely on imports, companies like Tata, Mahindra, and Ola Electric increased their supplier ecosystem for parts like batteries, motors, electronics, etc. For its Tiago EV, Tata locally sourced over 75% components. However, India still relies on imports for lithium-ion cells, key component of EV batteries. A joint IESA-EY report pegged the localization levels in the EV industry to cross 80% by 2030.
China was the second-largest EV market in 2020, with over 1.2 million new registrations and a 5.5% sales share. China also had the largest EV stock in the world, with 4.5 million electric cars on the road by the end of 2020. China’s EV market is dominated by domestic brands, such as BYD, SAIC, and NIO.
- Government Incentives
The government provided a major boost to EVs through new incentives and policies in 2023.The Union-Budget 2023-24 extended the customs duty exemption to the import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in EVs. However, the import duties on other key components such as electric motors, power electronics, and battery packs remained unchanged or increase. Under the FAME II scheme, the subsidy for e-2 wheelers was fixed at Rs.10,000 per kWh with a cap of 15% of the cost of the vehicle w.e.f. June 1, 2023. The subsidy for e-3 wheelers was fixed at Rs 10,000 per kWh with a cap of 20% of the cost of the vehicle. The subsidy for e-4 wheelers was fixed at Rs. 10,000 per kWh with a cap of 20% of the cost of the vehicle or Rs.1.5 lakhs, whichever is lower.
- Ola Electric launched its first electric scooter
The Ols S1 became the market leader in the two-wheeler segment, unveiled in August 2023, and received over 10 lakh bookings within 24 hours of its launch. Ola electric also set up the world’s largest two-wheeler factory in Tamil Nadu, with a capacity to produce 10 million units annually. By December 2023, Ola Electric sold over 5Lakh units of the Old S1, capturing a 66% market share in the electric two-wheeler segment.
The United States was the third-largest EV market in 2020, with over 295,000 new registrations and a 2% sales share. The US EV market is led by Tesla, which accounted for 79% of the total EV sales in 2020. Other popular models in the US included the Chevrolet Bolt, the Nissan Leaf, and the Hyundai Kona Electric.
- Mahindra & Mahindra introduced the Mahindra Treo Zor
The first electric three-wheeler cargo vehicle in India, launched in November 2023 and offered a range of 125 km, a payload capacity of 550 kg, with a low maintenance cost. The vehicle was designed to cater to the needs of urban delivery and e-commerce segments, as well as small businesses and traders. The Mahindra Treo Zor received a positive response from the market with over 10,000 units sold by the end of 2023.
- Hyundai Motor India launched the Hyundai Ioniq 5
The first electric car in India supported vehicle-to-grid (V2G) technology. The vehicle was launched in December 2023 by offering a range of 480 km, a top speed of 185 kmph, and bi-directional charging feature allowing the car to supply electricity to other devices or the grid. The vehicle was priced at Rs. 35 lakh and received over 5,000 bookings within a week of its launch.
- New policy announced by the government of India to promote the adoption of electric buses in public transport
In September 2023, the policy announced and aimed to replace 50% of the existing diesel buses with electric buses by 2025, and 100% by 2030. The policy also provided incentives such as subsidies, tax exemptions, and low-interest loans to state transport corporations and private operators to procure electric buses. The policy also resulted in a surge in the demand for electric buses, with over 10,000 units ordered by various states and cities by the end of 2023.
As it clearly shows, 2023 proved to be historic for India’s EV revolution with focused efforts by all stakeholders, key barriers around affordability, charging infrastructure, and product range. The prominent development in the EV Indian market shows that the stage is set safely for Indians to drive smoothly in a major transition period.
The growth promises to look brighter beyond with more product launches, startups, and investments.
Sources:- pib, Ola, bain & company, invest india, imarcgroup
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