4 Reasons Why India’s EV Industry is Poised for Rapid Growth

4 Reasons Why India's EV Industry is Poised for Rapid Growth

Electric vehicles in India are charging ahead faster than you can say “full throttle”.

Hold on to your seats, because India’s electric vehicle (EV) industry is not just gaining speed—it’s shifting gears faster than a Tesla Roadster on Ludicrous mode. EVs are no longer just futuristic fantasies; they’re already ruling the roads of Delhi and zooming past their counterparts fueled by fossil fuels on the highways of Mumbai. From zippy electric scooters that alleviate traffic jams to sleek electric cars that offer a futuristic driving experience, the country’s EV market is expanding at an incredible pace. 

In this article, let’s take a pit stop and explore the four reasons why India’s EV industry is set to charge ahead. So if you’re ready to join the EV revolution and leave gasoline in the dust, let’s hit the road!

Government incentives and support

India is gearing up to take the EV market by storm, thanks to the government’s strategic initiatives and incentives aimed at propelling the adoption of EVs and fostering research and development in this sector. Here are some of the ongoing government schemes fueling India’s EV revolution:

Faster Adaption of Manufacturing of Electric Vehicles II (FAME-II)

Launched in 2015, the FAME scheme serves as a catalyst for transitioning from petrol and diesel vehicles to electric ones. FAME-II, introduced in 2019 with a budget of Rs 10,000 crore (US$1.2 billion), aims to accelerate the adoption of EVs by providing financial support for various categories including e-three-wheelers, e-buses, e-passenger vehicles and e-two-wheelers. The scheme allows companies to offer up to a 40% discount on locally manufactured EVs, which can be claimed as a government subsidy. Recently extended until March 2024, FAME-II is expected to drive significant growth in India’s EV market.

Special e-mobility zones 

To address traffic congestion caused by private vehicles and promote the market share of EVs, special e-mobility zones will be established in major cities across India. These zones will restrict access to only EVs or comparable alternatives, creating an environment conducive to the growth of EV adoption. 

Duty reduction on EVs and their components

The Indian government has proposed a reduction in customs duties on key components of EV motor parts and batteries such as nickel ore, concentrates, nickel oxide, and ferro nickel. This aims to support local EV battery producers and lower the overall production costs of EVs. 

Battery Swapping Policy

Drafted in 2022, the policy seeks to establish uniform EV battery standards and facilitate the adoption of EVs in time-sensitive sectors such as deliveries and inter-city transportation. It offers a practical alternative to on-the-spot recharging through battery swapping. By standardizing battery configurations, this initiative will ensure interoperability, eliminate concerns about battery compatibility and reduce costs for battery producers.

Production Linked Incentive for Advanced Chemistry Cell Battery Storage (PLI-ACC Scheme)

Launched by the Department of Heavy Industries, this scheme is designed to attract investments in India’s advanced chemistry cell battery storage manufacturing facilities in India. It provides financial incentives to eligible manufacturers based on their incremental sales of EVs, promoting self-reliance in battery manufacturing. However, some reports have urged the government to address the stringent selection requirements of the scheme to ensure that smaller businesses can also benefit and contribute to the flourishing EV ecosystem.

These government incentives and support mechanisms are pivotal in driving the growth of India’s EV industry, as the country sets ambitious targets to have 30% of all vehicles on its roads running on electricity by 2030.

Rising fuel prices

The recent surge in fuel prices following Russia’s invasion of Ukraine has sent shockwaves throughout India, prompting concerns and anxieties among the population. However, amid the prevailing gloom, there is a glimmer of hope on the horizon. As reported by The Times of India, the EV sector in India is experiencing a huge boom in the face of escalating fuel prices. With petrol and diesel costs reaching unprecedented heights, people are awakening to the myriad advantages offered by EVs. 

Beyond their long-term cost-effectiveness, EVs pave the way for a greener future. This newfound awareness has triggered a surge in demand for electric scooters and bikes as a more economically viable option. The trajectory upward trend suggests a promising future for India, characterized by heightened environmental sustainability and a significant reduction in carbon emissions.

Innovative EV Startups

India’s EV industry is experiencing a wave of innovation and disruption, driven by a cohort of pioneering startups. These companies are developing innovative and affordable EVs as well as charging and battery technologies. Some of the most notable EV startups in India today include Ather Energy, Altigreen, OLA Electric, Revolt Motors, BLUSmart and Baaz Bikes. These companies are helping to make electric vehicles more affordable, accessible and appealing to consumers in India. 

For example, founded in 2013 and backed by Flipkart, Ather Energy has captured the attention of the younger generation with its high-performance and sleekly designed scooters, the 450X and 450 Plus. In January 2023, Ather Energy announced advanced features for scooters like an intelligent touchscreen dashboard, integrated navigation, auto-hold feature, trip planner (to help drivers plan out trips with multiple stops for charging) and more, setting new standards in the EV market. 

Meanwhile, Altigreen, also established in 2013, focuses on last-mile transportation (i.e. the last part of a merchandise delivery journey from the distribution center to the final destination) solutions. It provides commercial-grade two, three and four-wheelers powered by its proprietary drivetrain technology. Its revolutionary HyPixi system, introduced in 2016, allows existing petrol or diesel vehicles to be seamlessly converted into hybrid electric vehicles, enhancing fuel efficiency, reducing emissions and cutting fuel costs by up to 30%.

These startups are not just delivering affordable and efficient EVs but also pushing the boundaries of charging infrastructure and battery technologies. Their collective efforts are transforming India’s EV market and paving the way for a sustainable future.

Investment pouring in

India’s EV industry is experiencing an unprecedented wave of investments, propelling rapid growth and innovation across the sector. In 2021, the country’s EV startups attracted an astounding US$444 million in investment, marking an extraordinary 255 percent increase compared to the previous year. 

The lion share of this capital injection has been allocated to key players such as Ola Electric, which secured a staggering US$253 million, followed by BLUSmart (US$25 million), Simple Energy (US$21 million), Revolt (US$20 million) and Detel (US$20 million). Notably, 63% of India’s 500 EV startups are dedicated to manufacturing, showcasing the industry’s robust growth and manufacturing capabilities. 

Private equity and venture capitalists have recognized the immense potential of the Indian EV market, leading to a substantial surge in investment from US$181 million to US$1.7 billion. With this significant influx of capital, the Indian EV market is primed for sustained growth and success in the coming years.

Challenges and the road ahead

India’s EV industry is on a rapid trajectory, propelled by government support, escalating fuel costs, pioneering startups and substantial investments. However, challenges lie ahead that require attention and resolution. The development of robust charging infrastructure, addressing range anxiety concerns (the fear of running out of battery charge before reaching a destination) and ensuring sustainable battery manufacturing are critical hurdles that need to be overcome. Nevertheless, with the road ahead shining with promise, the electric future of transportation in India is within reach, beckoning a transformative era in mobility.

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Header image courtesy of Freepik

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