Thu. Sep 21st, 2023

Considering India is one of the largest importers of fossil fuels in the world, with crude oil imports alone estimated above $125 billion in 2020, attention is naturally being shifted to electric vehicles. 

Based on the 2020 World Air Quality Report, 22 Indian cities are among the most polluted in the world, and transportation is one of the main sources of CO2 emissions and other greenhouse gases. Traditional cars still hold the largest share of the market, but the popularity of EVs is now on the rise. 

EV market grows in  2021

In December 2021 alone, more than 50,000 EVs were sold in India, a record figure for the country. That’s a 240% YoY increase compared to December 2020, driven mainly by two-wheelers and passenger three-wheelers accounting for over 90% of total EV registrations. 

Electric cars accounted for 5% of total sales, but overall, people are becoming increasingly aware of emissions and the benefits of green mobility. As the country with the second-largest population in the world, India is a place where there is a lot of potential for growth in the following years for EV manufacturers, both local and foreign. 

Future prospects encouraging

The investor community is also interested in the industry, which is why companies producing electric cars are popular among online trading enthusiasts. On top of big names like Tesla, traditional manufacturers like Kia, Mercedes, Volkswagen and Toyota are also launching more affordable EVs. 

Based on a study released by Mordor Intelligence, the Indian EV market was worth close to $5.5 billion in 2020 and is expected to grow at a CAGR of 23.47% by 2026, tripling in value. As a result of the COVID-19 pandemic, EV sales registrations were 236,802 units in FY2021, down from 295,683 in FY2020. 

People are generally more conservative with their finances during an economic downturn, reluctant to spend unless they need something urgently. EVs are not indispensable, but still, as confidence and economic activity pick up once again, so should the electric car industry. 

Government support via policy framework 

Another reason for this optimistic projection regarding India has to do with government support. Union policies such as FAME I and FAME 2, the PLI Scheme, and the Scrappage Policy have encouraged consumers to use EVs, while also supporting manufacturers. 

Approximately 50% of Indian states have policies for promoting the use of EVs, including subsidies for purchase, exemption from road tax, registration charges, and attractive interest rates for loans. 

Work on developing proper infrastructure, such as battery & vehicle manufacturing, charging, or scrapping centers, continues at a robust pace. The central government began its plans for incentivizing EVs in 2012 and a decade later, results are starting to show. The “National Electric Mobility Mission Plan (NEMMP) 2020” published in 2012 now takes the credit, given it covered both hybrid and electric technologies. 

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