India aims to achieve 30% EV penetration in private cars, 70% in commercial vehicles and 80% in two and three wheelers by 2030

Sales of electric vehicles in India are shown in the chart
Sales of electric vehicles in India. Image: MeelBijendra/Nandini

NEW DELHI, August 20 (MeelBijendra) – Electric car industry in India is still in its nascent stage with 41,441 units being sold in the first few months of FY23 and electric vehicle sales in India are expected to register a strong growth rate in the coming decade.

In India, 2,433 electric cars were sold in the year 2018, which has reached 41,441 units in 2023 (till 15 March) with a growth of 76% CAGR. In the same year 2018, 1,981 electric two-wheelers were sold, which has reached 6,68,843 units in 2023 (till 15 March) with an increase of 220% CAGR.

India’s electric mobility program driven by a government-supported demand initiative model at the core of Faster Adoption and Manufacturing of (hybrid and) Electric Vehicles in India (FAME-India) was launched in 2011 as a part of the National Mission on Electric Mobility. Meanwhile, the Government of India aims to achieve 30% EV penetration in private cars, 70% in commercial vehicles and 80% in two and three wheelers by 2030.

Also read: EV Stocks rise: Battery swapping policy, interoperability standard to be formulated for e-vehicles

In view of these developments, various state governments of India have come up with their own EV policy and these newly released policies emphasized on electrification of public bus fleet by providing tax credits/registration fee exemption for purchase of electric four wheelers resulting in strong growth rate in sales of electric vehicles.

Experts believe that the expected surge in growth in the electric vehicles sector in India will happen after the year 2025-27 when the price gap between internal combustion engines and EVs is expected to narrow down significantly. Rising fuel costs, stringent emission control norms and low total cost of ownership are creating a stir among potential car buyers, who until recently had never considered an EV while making a buying decision.

Also read: Suzuki Motor to invest ₹10,440 cr for local manufacturing of electric vehicles, batteries in Gujarat

Economist Pritika Agarwal said that the pace of development achieved by India’s electric vehicles market in the last initial years is tremendous and it is pointing towards huge opportunities in coming years i.e. 2 to 3 decades.

She further said that India still imports critical components such as lithium-ion cells and currently lacks domestic manufacturing of battery cells, forcing the industry to depend on imports from China.

Relations between China and India deteriorated since mid-2020 when Chinese and Indian troops clashed along their disputed Himalayan border but after military and diplomatic talks, the situation has calmed down to a great extent but the face-off continues in the areas along the 3,800 km border. India alleges that China has repeatedly transgressed into its side of the disputed border in violation of agreements signed since the 1990s, while Beijing denies the allegations and blames the Indian government for the violations.

Also read: Eicher Motors to buy 10.35% stake in Stark Future SL by investing €50 million: Electric Mobility

Government of India brought several policies to reduce import dependence and to promote “Make in India” initiative so that the domestic industry made rapid progress in assembling of battery packs as well as battery management system.

Recent changes in India’s FAME II policy guidelines see strong growth in lithium-ion use in the electric two-wheeler sector and under the policy many indigenous companies have entered the electric vehicles sector. As a result, sales of around 1.25 lakh predominantly electric two-wheelers and four-wheelers create an annual demand for battery packs.

Also read: Tesla’s business model has crossed $1 trillion and most valuable car company in the world