India’s EV Market: Trends and Future Prospects

India’s journey toward achieving a 30% EV market share by FY 2030 is fraught with challenges. The current EV penetration rate in India has seen modest growth of approximately 200 basis points annually from FY 2021 to FY 2024. To meet the 2030 target, this rate must nearly double to 380 basis points per year.

But several state EV policies are nearing expiration, which threatens sustained investor confidence. Moreover, the lack of a cohesive, long-term strategy has further derailed momentum, leaving India far from its envisioned EV revolution. 

The Electric Mobility Promotion Scheme (EMPS) 2024 aimed to boost electric two- and three-wheelers but did not include electric passenger vehicles and buses. The government's recent approval of two major incentive schemes marks a crucial step in promoting electric buses and trucks, but the continued exclusion of electric passenger vehicles from subsidy schemes raises questions about the government’s commitment to achieving its FY 2030 target.

The fleet electrification segment, which constitutes 15% of the total industry EV portfolio, remains essential. However, after the government withdrew support, the number of electric passenger vehicles used in the commercial fleet segment declined sharply.

High initial costs present another significant barrier for consumers, because EVs are typically priced 20% to 30% above their internal combustion engine (ICE) counterparts. Coupled with India’s reliance on imported components and batteries, these cost dynamics hinder the growth of the EV sector. Despite government efforts to promote localization through various policies, the localization rate is not increasing as expected.

Moreover, the lack of adequate charging infrastructure continues to pose a formidable challenge. Although the number of public charging stations has risen dramatically, disparities persist, particularly in Tier-2 cities and rural areas. This uneven growth contributes to range anxiety among potential buyers, further complicating the transition to electric mobility.

Additionally, the growing demand for hybrid vehicles presents another challenge, as consumers often seek familiar alternatives to fully electric models.