India’s annual electric vehicle sales grew 27% to surpass 2 million units in 2024, and favourable operating costs and new federal policies will help continue the momentum this year. Electrification of municipal buses and building more fast chargers remain priorities for the government. While growing demand and intensifying competition are driving several automakers to fund their expansion plans via the public markets. 

•         Legacy two-wheeler makers overtake EV startups: Electric models are now 2.6% of all passenger vehicles sold in the country and competition is heating up. While Tata Motors retained its top spot, MG Motor was the biggest gainer: its market share grew to 25% in 2024 from 13% the year before. Startups and relatively newer players, which have until now dominated electric two-wheelers, are facing a growing threat from legacy automakers. The combined share of electric two-wheelers sold by TVS Motor, Bajaj Auto and Hero MotoCorp grew to 40% from 29% in 2023. Annual EV sales by Bajaj grew 2.7 times in 2024 and it is now the third-largest EV seller, overtaking Ather Energy.

•         Sales of electric commercial vehicles (vans and trucks) grew 2.5 times in 2024 to over 6,220 vehicles. The expiration of federal subsidies for electric commercial vehicles in April 2024 led to a jump in sales early in the year as customers rushed to claim the incentives. EV adoption is concentrated in the light commercial vehicle segment where demand is driven by delivery/logistics service providers adopting electric vans and small trucks due to lower operating costs and to fulfil decarbonization targets. Deployment of heavy electric truck is restricted to niche use-cases such as port operations and mining operations.

•         Investment: Electric mobility firms headquartered in India secured $1 billion in funding from venture capital, private equity investors and commercial banks in 2024. EV manufacturers picked up the bulk of this funding, closing deals of about $671 million. Ola Electric became India’s first pure-play EV company to be listed on public markets while Hyundai India’s initial public offer was the country’s biggest yet.

•         Maharashtra and Karnataka lead EV uptake: In 2024, sales of passenger EVs and electric two-wheelers were the highest in the states of Maharashtra and Karnataka. Delhi now has the largest fleet of electric buses, surpassing Maharashtra. Delhi and Maharashtra host 49% of India’s e-bus fleet of 10,730 vehicles. Policy support, rising air pollution and low operating costs are encouraging Indian regional governments to deploy more e-buses on their roads. 

•         Big year for policy announcements: Electric trucks are set to receive their first ever upfront subsidies under the federal government’s PM E-Drive Scheme announced in September 2024 – the country’s third demand-side policy for the sector at the federal level. The government will continue to subsidise the purchase of e-buses, though this will be extended only to state transport utilities in nine cities, with priority to those that scrap older vehicles. A payment security mechanism will also be established for the purchase and operation of municipal e-buses, thus addressing the biggest bottleneck in increasing their uptake. Six states announced policies in 2024 that are tailored to incentivise electric vehicle demand and supply.

(Courtesy: Bloomberg)

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