Electric Vehicles Market in India 2022-2027

Electric Vehicles Market in India 2022-2027

Electric Vehicles (EVs) account for less than 1% of the vehicle sales in the country. However, as many as 90% of the existing four-wheeler owners would be willing to switch to an EV provided that the right infrastructure is in place, out of which 75% of the population believes EVs could replace Internal Combustion Engine (ICE) vehicles by 2030. Electric two-wheelers have already gained wide popularity. Their economic viability is one of the major drivers of their sales in tier I cities.

Companies such as Olectra, Mahindra & Mahindra, JBM Auto, and Ather are developing not only electric vehicles but are also concentrating on the expansion of EV infrastructure development for the market

Market insights:

In FY 2022, around 6,50,630 EVs valued at about INR 115.67 Bn were sold in the country. It is expected that the number of vehicles sold in a year may cross eight million by 2027, expanding at a CAGR of ~68.38% during the FY 2023 – FY 2027 period.

Given their economic viability in terms of price and fuel economy, two-wheelers account for the largest share of the EV market. At present, electric four-wheelers have very low penetration in the EV market due to high upfront costs, low battery life, underdeveloped charging ecosystem, and import-based infrastructure.

Segment insights:

Electric two-wheelers dominate the EV market; 59.56% of the EVs sold in FY 2022 were two-wheelers. The segment will continue to lead the market during the forecast period, but its growth rate is feared to reduce due to saturation. On the other hand, four-wheelers (both commercial and personal) are expected to witness a massive growth during the forecast period. This is because most consumers are looking for an alternative to ICE cars and buses due to the high price of petrol and diesel. Three-wheelers are also anticipated to show a steady growth during the forecast period.

COVID-19 impact analysis:

The future for EV market in the country is expected to develop at a fast rate. The government has reduced the GST on EVs to 5% to make them more affordable and will provide capital grants to organizations – such as delivery companies and e-commerce players – that promote EV adoption. It also approved the installation of more than 2,600 EV charging stations with the aim to provide charging facilities every 25 kms thus addressing range anxiety. The Union Budget 2022 – 23 also had several proposals for India’s EV landscape, such as inducing EV penetration in public transport and create special mobility zones for EVs.