Electrifying Investment: India's Electric Vehicle Mobility Ecosystem

India's electric vehicle industry is booming thanks to 100% FDI, new manufacturing hubs, and an increased push to improve charging infrastructure. In addition to federal subsidies and policies that promote deeper discounts for electric two-wheelers manufactured in India, the government is also investing in ACC battery storage production locally. The Minister of Power revised the Consolidated Guidelines & Standards for Charging Infrastructure for Electric Vehicles (EV) in January and amended them in November 2022. In September 2021, the Cabinet approved a production-linked incentive scheme for the automotive sector to boost the production of electric vehicles and hydrogen fuel cell vehicles.

By September '22 (YTD), more than 43 EV startup funding deals had been reported, totaling more than 630 million dollars, whereas the total number of deals in 2021 was 47, totaling USD 570 million. Additionally, revenue from electric vehicles has increased significantly. During the April-September 2022 period, 277,910 electric two-wheelers were sold, an increase of 404 percent over 55,147 units last year. There were 18,142 electric cars sold in H1 FY 2022-23, a 268 percent increase.

The Indian electric vehicle market was valued at USD 7,025.56 million in 2021, and it is expected to reach USD 30,414.83 million by 2027, registering a CAGR of 28.93% in terms of revenue during the forecast period (2022-2027).

The Indian electric vehicle market is divided into segments based on vehicle type (four-wheelers, three-wheelers, and two-wheelers with electric motorcycles and scooters), power source (batteries, plug-in hybrid vehicles, hybrid electric vehicles, and fuel cell electric vehicles), and state policy based (Maharashtra, Uttar Pradesh, Tamil Nadu, Rajasthan, Punjab, Karnataka, Delhi, Gujrat, Telangana, Kerala, Haryana, West Bengal, Madhya Pradesh, and Rest of India). Initially, Karnataka led this policy with its launch in 2017 and subsequent revisions in 2021 following pushback from other states. As of now, all states have developed new policies to create fertile ground for the EV mobility sector.

Emerging market players

The incentives have motivated many leading battery manufacturers, such as Amara Raja Batteries, to invest in green technologies, including lithium-ion batteries.

Further responding to the opportunity that India’s EV industry presents, many leading industry players like OLA Electric Mobility Pvt, Ather Energy, and Mahindra Electrics are rapidly growing their market presence, which is now challenged by LML Electric and Bajaj Chetak. Moreover, certain states like Karnataka and Tamil Nadu are rolling out innovative and timely investor-friendly policies besides building the necessary infrastructure.

In April 2022, one of the world’s most energy dense batteries at 54MWh, developed by a Bengaluru-based battery startup – Pravaig, was acquired by a European renewable energy company, Eren Groupe, for its storage applications. Having a high density implies that the battery gives more power per atom, proving to be cost-effective when compared with alternatives such as sodium-ion or aluminum air. The developers of the battery have also informed that it takes just 30 minutes to fully charge a battery. This new acquisition by a European company will not only give a boost to domestic manufacturing, but will also pave the way for making EVs more economical, considering batteries usually account for 35-40 percent of the total cost.

As a result of all these trends, cleaner mobility solutions are becoming increasingly affordable and available in India. As well as contributing 6.3% to India's GDP, the transportation sector is a major energy consumer and polluter. The adoption of climate positive policies will thus facilitate foreign direct investment in auto and auto component manufacturing, R&D, logistics, support infrastructure, and related industries.