The electric vehicle (EV) sector in India has faced significant fluctuations between 2022 and 2024, dramatically impacting its funding climate and market dynamics. A recent report revealed concerning information: the EV industry lost half of its funding during this time, attributed largely to drastic subsidy cuts under the PM-E Drive scheme and the revisions of existing incentive structures.
Funding for India's EV sector plummeted from USD 808 million in 2023 to just USD 586 million in 2024, according to data from Venture Intelligence. The decrease highlights growing apprehension among investors due to the government's shifts away from providing substantial incentives for electric vehicle production and adoption.
Previously, the FAME-II scheme, set up to accelerate the uptake of electric vehicles, entailed generous financial incentives of up to INR 15,000 per kilowatt hour, significantly lowering the cost barrier for consumers. These incentives have since been revised to INR 10,000 per kilowatt hour. The PM-E Drive scheme has altered its focus, particularly affecting electric four-wheelers and hybrid models by excluding them from government subsidies, which has sparked concern across the industry.
Despite the decline in funding, the sector has still marked astounding milestones. Retail sales of electric two-wheelers reached impressive heights, surpassing one million units for the first time. By 2024, the EV industry saw 1.9 million EVs sold, reflecting a 24.5% increase from the previous year. Notably, figures indicate electric scooters and motorcycles have collectively crossed 10.7 lakh units sold by November 2024, marking 37 percent progress year on year. Yet, the numbers display increased competition among manufacturers to hold market leadership.
Ola Electric emerged as one of the dominant players, even as the market faced subsidy obstacles, using aggressive discount strategies and significantly increasing its retail presence from 800 to 4,000 stores nationwide. Bhavish Aggarwal, Chairman & Managing Director of Ola Electric, expressed the company’s resolve, stating, "We promised, and now we have delivered! Today marks a significant milestone in India’s EV journeys as we expand our network to every city, town, and taluk." Meanwhile, competitors like Ather Energy and TVS Motor have introduced diversified models targeting newer market segments, especially Tier 2 and Tier 3 cities which have become growth hotspots for EV adoption.
Yet the road to success has not been free of hurdles. Investors are calling for more profitable environments and improved incentives to fuel substantial investment flow back to the sector. Despite the overall funding decrease, the dynamics have shifted focus; more capital is now funneled toward infrastructure initiatives like battery-swapping technologies and the development of charging networks. An investor noted, "Even though we saw lower investments, newer players emerged, and apart from just OEMs, players like Exponent and Battery Smart raised significant funds," emphasizing the movement toward the overall EV ecosystem rather than solely OEM growth.
To promote electric mobility and consumer confidence, enhancing charging infrastructure remains imperative. The government has earmarked numerous initiatives, paving the way for over 10,000 public charging points to be installed, and Ola Electric has committed to setting up 10,000 chargers by 2025. Yet, challenges such as range anxiety and lack of standardization continue to hinder acceptance.
Government initiatives such as the PM Electric Drive Revolution initiative, which allocates INR 10,900 crore toward improving EV infrastructure and providing financial support for EV components, are steps toward mitigating these challenges. Despite this, the exclusion of electric cars sparked concerns about unrealized potential within the passenger vehicle EV market segment. Nevertheless, with sales for electric cars witnessing approximately 18% growth as automakers gear up to release several new EV models, optimism lingers over the industry's future prospects.
What drives adoption is not just the government’s financial intervention, but the active involvement of consumers advocating cleaner, more efficient transport options. Public sentiment is shifting toward eco-friendliness, with individual stories like businessman Rahul Bhatia's highlighting personal reasons behind transitioning to electric vehicles: "Switching to an EV has been one of the best decisions I've made. Not only do I save on fuel costs, but I also feel proud knowing I'm contributing to a cleaner environment for my children." Bhatia reflects the enthusiasm within families advocating for sustainable choices—an aspect underlined by surveys indicating younger generations strongly support environmental action surrounding climate change.
Overall, there’s mounting anticipation as 2025 approaches. The EV community's engagement through awareness and education campaigns reflects changing priorities within households, proving instrumental for continued market growth. The next horizon for India’s electric vehicle industry seems promising, loaded with opportunities to drive forward innovative mobility solutions, fulfilling ambitions toward achieving at least 30% EV penetration by 2030.
