India’s EV revolution in 2024

The year 2024 marked a significant step for India's EV market, reaching its highest-ever annual sales, exceeding 2 million units for the first time.

Total EV sales were 2,022,873, a 25.4% year-on-year growth over 2023. EVs constituted 7.7% of India's total automobile sales in 2024.

This growth is predominantly driven by two- and three-wheelers, a distinct characteristic compared to Western markets.

• Electric two-wheelers (e-2W) were the largest segment, with 1,211,193 units sold, making up 59.9% of the market and showing 30.7% YoY growth. Ola Electric led this segment with a 35.3% market share, followed by TVS, Bajaj, and Ather, all selling over 100,000 units
• The three-wheeler (3W) segment saw strong EV penetration, particularly in cargo (24.2%) and passenger (20.8%) categories, where cost savings are a major factor. Electric four-wheeler (e-4W) penetration is lower at 2.5% but is increasing, with sales reaching just under 106,000 units in 2024.
• Electric four-wheeler (e-4W) penetration is lower at 2.5% but is increasing, with sales reaching just under 106,000 units in 2024.

Factors driving this shift include government incentives, improving charging infrastructure, rising fuel costs, and decreasing battery costs.

Despite the rapid market expansion, domestic players face challenges:

• Financial losses: Startups like Ola Electric and Ather Energy have reported significant net losses.
• Governance scrutiny:The Gensol-BluSmart loan fraud scandal highlighted governance failures in the sector.
• Intense competition: Domestic startups compete with both Indian legacy players and potential foreign entrants.

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How does India’s EV market compete globally?

India is now among the top five global EV markets by volume. However, its market differs significantly from Western countries, being two-wheeler-led, price-sensitive, and focused on urban commuting.

The role of foreign players: Global leaders like Tesla and BYD face significant hurdles.

• Tesla: High import tariffs, like 100% on fully built cars, make premium models expensive. While lobbying for tariff reduction and exploring local sourcing, Tesla is proceeding cautiously. Elon Musk has discussed a potential investment contingent on improved import conditions.
• BYD: The Indian government rejected BYD's proposal for a $1 billion joint venture factory on national security grounds, limiting its presence to a small import business. This reflects India's policy of scrutinizing Chinese investments and promoting domestic capabilities.

Domestic competition & strategy: Indian automakers are actively expanding their EV presence.

• Tata Motors leads the e-4W market with over 60% share and is investing in battery cell manufacturing.
• Mahindra is growing its EV lineup and has a technology partnership with Volkswagen.
• In e-2W, legacy players Bajaj Auto and TVS Motor have successfully transitioned, leveraging their manufacturing and distribution networks to become leading EV manufacturers.

India's policies aim to foster domestic growth and secure its supply chain.

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Conclusion

India's ambitious goal of becoming a global leader in EV manufacturing by 2030 is supported by strong domestic market growth and government initiatives.

The unique two-wheeler-dominated market structure presents both opportunities and challenges.

The journey involves navigating complexities such as achieving profitability for domestic startups, managing foreign entry through policy, and balancing protectionism with innovation.

The period between 2025 and 2027 is seen as crucial, with expectations of increased sales, higher competition, greater localized production, and stricter policy scrutiny.

India's success in becoming a global EV hub will hinge on its ability to innovate for affordability, meet diverse mobility needs, and strengthen its domestic manufacturing ecosystem.

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