A report by SBI Capital Market reveals that Electric Vehicle penetration in India reached 7.4 percent registering a significant milestone from less than 1 percent in 2019. A report titled ‘Charging the Ecosystemic EV-olution’ estimates remarkable growth highlighting sales of electric vehicles may reach 30-35 percent of total vehicle sales by 2030.
EV accounts for one in every four vehicles with a combustion engine, compared to one in 40 vehicles five years ago.
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India’s electric vehicle (EV) market is booming, driven by targeted incentives and strategic investments. Policies like a reduced 5% GST on EVs (compared to 28% for internal combustion engine vehicles), lower road taxes in several states, and subsidies under the FAME and PM E-DRIVE schemes are key growth drivers. Additionally, import duty rebates under the SPMEPCI framework have encouraged global manufacturers to set up local production.
Structured Policies Boost EV Adoption
A recent report highlighted the structured nature of these incentives, which focus on specific vehicle categories and charging infrastructure expansion. This approach enables India to adopt proven global EV solutions without starting from scratch.
Two- And Three-Wheelers Lead the Charge
Two- and three-wheelers are leading EV adoption in India. Their lower costs, smaller batteries, and commercial use cases have made them popular, especially in lower-income states. Removable batteries and home charging options further enhance their appeal. However, four-wheelers lag due to consumer preferences for performance and design over cost savings.
Major Investments in Batteries and Charging Infrastructure
India needs significant investments to meet its EV battery and charging infrastructure goals. The report estimates ₹500–600 billion in capital expenditure is required to achieve 100 GWh of battery capacity by FY30. Currently, the country imports around 75% of its battery needs. However, joint ventures and the government’s Production Linked Incentive (PLI) scheme could reduce this to 50% by FY30.
Charging infrastructure also needs ₹200 billion in investments to expand from 25,000 chargers to 90,000 by FY30. Notably, fast chargers remain a small fraction of the existing network.
Financing Gaps Remain a Key Challenge In EV adoption
Limited consumer lending is a significant barrier to EV adoption. Banks remain cautious due to high loan-to-value (LTV) ratios and the lack of a robust secondary market. The report emphasizes the need for comprehensive financing policies covering the entire EV value chain.
Collaboration For Sustainable Growth
India’s EV growth will rely on strong collaboration among automakers, startups, policymakers, and financiers. By addressing financing gaps and investing in infrastructure, India can build a sustainable EV ecosystem and reduce dependence on imports.
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