Growing appetite for EVs in India

By Om Prakash Sharma , Principal Research Analyst, S&P Global Mobility

The Indian electric vehicle (EV) industry seems to have entered the fast lane. New models for EVs in India are hitting the market, charging infrastructure is expanding and sales are rising. In 2024, nearly 100,000 EVs were sold in India, reflecting a 20% increase from the previous year, while total light vehicle sales reached about 4.9 million units.

Even a slowing passenger car market in 2024—with year-over-year car sales growth at just 4%, its lowest in four years—could not slow EV sales.

In terms of volume, EV sales in India are still low compared to countries such as mainland China, the United States or some countries in Europe. However, if current momentum in demand can be sustained, India could attract more foreign investments and garner recognition as a potential EV market of the future. This at a time when many international markets are grappling with lower-than-expected BEV demand and investor pushback.

What is driving demand for EVs in India?

Affordability is one of the top drivers of EV demand. Although EVs in India cost more than internal combustion engine (ICE) cars with similar specifications and features, the price gap is narrowing thanks to increasing competition and government incentives.

Last year, the Indian government approved a new EV policy to attract investments from global EV companies and promote local manufacturing. The policy reduced customs duty on importing electric cars as completely knocked down (CKD) kits. The duties were reduced from 70% to 15%, subject to cars with a minimum cost, insurance and freight (CIF) value of $35,000 and above, for a period of five years.

However, the duty cut is only applicable for car companies committing to invest a minimum of $500 million and set up an EV manufacturing plant in India within three years from the issuance of the approval letter by the Government's Ministry of Heavy Industries.

If current momentum can be sustained, India could attract more foreign investments and garner recognition as a potential EV market of the future.

The Indian government continues to offer new incentives for the EV industry to encourage investors. In its budget for fiscal year 2025–26 presented Feb. 1, the government announced that key materials such as cobalt powder, lithium-ion battery waste and scrap, lead, zinc and 12 other critical minerals will be fully exempt from basic customs duty.

These exemptions are expected to reduce the manufacturing costs of EV batteries in India. The Indian government already offers incentives under its Production Linked Incentive scheme to support the local production of EV batteries.

According to S&P Global Mobility’s Global lithium-ion battery cell production capacity tracker, India is forecast to have more than 30 GWh of annual lithium-ion cell production capacity by 2030, compared to almost non-existent capacity currently. Tata Group’s Agratas Energy Solutions will likely have the biggest production capacity in India, with Exide Industries and Log 9 Materials also having operational plants before the end of the decade.

Market outlook is positive

The growing excitement around EVs was palpable at the Bharat Mobility Global Expo. Held Jan, 17–22, the auto show featured over 1,500 exhibitors and attracted nearly 1 million visitors. Maruti Suzuki, India’s largest automaker by volume, introduced its first EV, the e-Vitara electric SUV. Tata Motors displayed an electric version of its Harrier SUV, while Mahindra unveiled two all-new, born-electric models: the BE 6 and the XEV 9. Hyundai, Kia, BYD, MG Motor, VinFast, Mercedes-Benz and Porsche also displayed EVs for the Indian market.

While EVs accounted for just 2.5% of total light vehicle sales in India in 2024, sales growth is fostering competition among automakers. Tata Motors, which sold over 61,000 units in 2024, leads the EV market, but competitors like BYD and MG are also increasing their presence.

According to S&P Global Mobility, total electric passenger vehicle production in India is expected to surge from about 125,500 units in 2024 to approximately 1.33 million units in 2030. The Bharat Mobility Global Expo highlighted the burgeoning interest in a developing EV market in India.

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