Indian EV Industry: Shaping the Future of Automobiles

During the UN Climate Change Conference, India unveiled its ambitious decarbonization target for 2030. The target requires reducing carbon emissions in the energy sector by 50 percent and achieving 500 gigawatts of renewable energy generation capacity by the year 2030, while also joining the global EV30@30 campaign. India aims to triple its current renewable capacity, with the EV30@30 campaign- a global initiative that aims to have 30% of all vehicle sales be EVs by 2030.

Government incentives, increasing environmental concerns, and technological advancements are acting as a catalysts in India’s electric vehicle (EV) sector growth. The Indian EV market size was valued at USD 8.03 billion in 2023 and is predicted to grow to US$ 113.99 billion by 2029, with a 66.52% CAGR. The Ministry of Heavy Industries accounted for around 0.52 million EVs registered in India in the last three years. India currently imports nearly 80% of its crude oil requirements, so depending on conventional energy resources is not sustainable. With initiatives such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, India strives to increase EV adoption to carry its transportation sector towards sustainability and innovation. As the demand for electric vehicles is growing tremendously due to population rise, the Indian automobile industry is expected to rank the third largest globally by 2030 and achieve 70% penetration of EVs.

Indian EV Market Trends

Electric vehicles in the micro-mobility category such as electric two-wheelers and three-wheelers are an ongoing trend in the market. Its rising demand and adoption are due to the highly price-sensitive Indian market. Most of the Indian population like to commute by two-wheelers to save time in growing traffic congestion. So in India, the low cost of electric vehicles coupled with the high practicality of two-wheelers in Indian road traffic conditions is likely to boost the adoption of electric two-wheelers and three-wheelers.

As per a Bain & Co. report, by 2030 electric two-wheelers could make up about 40 to 45 percent of all EVs sold in India, and electric passenger vehicles about 15 to 20 percent. However, the Indian government is aiming for EV adoption of buses to reach 40 percent, private cars to 30 percent, commercial vehicles to 70 percent, and two-wheelers to 80 percent by that time.

The data from VAHAN indicates that India’s electric two-wheeler market experienced a significant rise of 34.42 percent in sales in the third quarter of FY 2023-24 compared to the previous quarter.

The Economic Survey 2023 forecasts that India’s domestic electric vehicle market will see a 49 percent CAGR between 2022 and 2030, with 10 million annual sales by 2030. Meanwhile, the electric vehicle industry is set to create around 50 million direct and indirect employment in the next 6 years.

Major Factors for the Growth of the Electric Vehicle Market:

Awareness of green ecosystem:

Risen awareness among consumers on gradually switching to green lifestyle solutions and consumers willing to pay extra for the added value of being environmentally responsible is boosting EV adoption. Due to the government’s focus on tightening emission control norms and introducing scrapping policies for conventional vehicles, most automakers in India are switching to eco-friendly solutions by producing electric vehicles.

Rising fuel prices:

The rise in fossil fuel prices in India is one of the major factors driving the demand for the electric vehicles market. Even though the purchasing cost of fuel-powered vehicles is lower than EVs, their operating cost is high due to increasing gasoline and diesel prices. On the other hand, the operating cost of electric type of vehicles is significantly less than that of fuel-driven vehicles.

Government policies and initiatives:

India’s electric vehicle (EV) market is in the nascent stage with the addition of the government actively putting together strategies to battle pollution and speed up the transition to e-mobility. Increased government push to promote EV adoption has created multiple business opportunities in mobility, infrastructure, and energy segments.

Reduction in the cost of electric vehicle batteries:

In a price-sensitive market like India, a consistent decline in the cost of lithium-ion batteries positively influences market growth. Then comes battery cost reduction, battery costs have declined by around 85% over the last decade which has witnessed more all-around EV adoption.

A shift in technology adoption:

The automobile industry is expected to undergo significant changes due to shifts in technology and challenges related to transportation while automotive giants are looking to include this feature within the vehicles.

Rialtes is Ready for The Next Green Revolution:

As the demand for electric vehicles (EVs) increases, it presents a significant opportunity for both local and international companies to invest in and contribute to the growth of India’s EV ecosystem. In 2023, 30% of all Dutch new vehicles were electric, India stands at 8%.

Rialtes with SAP plans to support the EV industry to match the Netherlands by 2030 and drive the transition to sustainable and convenient electric mobility. By leveraging SAP E-Mobility we aim to help you manage electric vehicle fleets and charging networks. As an SAP partner, we use our global implementation experience to provide you with real-time visibility across complex, global EV supply chains using SAP S/4HANA. If you are an Electric Vehicle manufacturer, we can guide you in integrating several functions into one dashboard, including purchase, sales, material requirement planning, finance, and production with SAP ERP Software.

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