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What’s driving India’s shift to electric vehicles? Explore the surge in EV adoption and how it’s steering India towards a greener future.
Ford Motor Company made headlines last year when it ceased its operations in India. This move left industry watchers and consumers wondering about the future of the car market in the country. Yet, the narrative is shifting.
Ford is eyeing a strong comeback. It got new approval under India’s Production-Linked Incentive (PLI) scheme for the auto sector. This time, their focus is on the burgeoning sector of electric vehicles (EVs). It is planning to use a plant in India as a base for the manufacturing of electric vehicles intended for export.
This pivot raises a compelling question: Are EVs becoming the next go-to in Indian automobiles? Dive into this blog as we uncover the electrifying future of mobility in India.
The State of EVs in India
The Indian EV market is currently at an exciting crossroads. Electric vehicles now account for about 5% of total vehicle sales, a clear sign of their growing acceptance. With over 4 million four-wheelers sold in 2023, the market is steadily expanding, yet EVs still represent a small fraction, with penetration at just 1%–1.5%.
This growth, particularly in the four-wheeler (4W) segment, has been impressive, boasting an 85%–90% compound annual growth rate (CAGR) from 2018 to 2023. However, this surge starts from a small base, and broader adoption is limited by factors like the high cost of EVs compared to traditional cars and a lack of charging infrastructure.
The majority of 4W EV sales are cars, thanks to a few manufacturers offering models with advanced features. However, the uptake in other categories like buses and trucks is minimal, primarily due to the scarcity of models and concerns over range and charging options. The adoption of EVs in three-wheelers (3Ws) has increased significantly, with over 50% of vehicles being electric in 2023 and two-wheelers (2W) had a growth of 37%. This indicates a massive shift towards electric mobility.
Why are EVs gaining momentum?
A convergence of economic, technological, and environmental factors is propelling the unprecedented global uptake of electric vehicles. Here are some of those factors:
Decarbonisation ambition
India has set an ambitious decarbonisation goal at COP26: 500 GW (gigawatts) of renewable energy capacity by 2030, combined with a 45% reduction in carbon emissions in the energy sector.
The EV30@30 campaign, which aims to have electric vehicles (EVs) account for at least 30% of new car sales by 2030, is a crucial part of this endeavour. Therefore, there is a tremendous push to increase the use of EVs from the government, automakers, and related businesses.
Consumer sentiment and sustainability
Indian consumers are increasingly aligning their purchase decisions with sustainability goals, making electric vehicles a preferred choice for their next automobile purchase. Almost 50% express a clear preference for full-battery electric vehicles over plug-in hybrids, underlining a growing commitment to reducing carbon footprints.
This shift is motivated by several factors, including the environmental benefits of EVs, lower total ownership costs, and quieter operation compared to internal combustion engine (ICE) vehicles.
Moreover, sustainability is becoming a crucial criterion alongside safety, brand, and cost considerations in vehicle purchase decisions, indicating a broad-based shift in consumer values.

Source: Mckinsey
Charging infrastructure
Charging infrastructure is both a challenge and a catalyst. The adoption of EVs in India faces its share of challenges, notably in terms of charging infrastructure. Consumer perceptions highlight concerns over the availability and readiness of charging points across the country.
Despite these concerns, two-thirds of Indian consumers would still embrace EVs, even in the absence of home charging solutions. Public and home charging stations are both essential to support this transition, with a need for investment in fast, convenient, and safe charging options to meet growing demand.
The digital shift in car buying
The EV boom is also reshaping how Indians buy cars. There’s a strong inclination towards online platforms for the car purchasing journey, signalling a shift towards digital, direct-to-consumer sales models.
However, the need for physical touchpoints remains, indicating a hybrid model where online platforms and traditional dealerships play complementary roles. This digital transformation is also opening doors to flexible ownership models, such as leasing and subscriptions, catering to a growing demand for convenience and flexibility.

Source: Mckinsey
Future outlook
The EV landscape in India is about to change. Predictions show a huge increase to over 40% penetration by 2030. Experts predict that the 2W and 3W industries will lead this growth due to their encouraging adoption rates.

Source: Bain & Company
India needs to address many issues for the adoption of EVs to pick up speed. EVs are still more expensive than their internal combustion counterparts. This is due to issues with the battery range and the undeveloped charging infrastructure. Resolving challenges with consumer financing alternatives is necessary.
As of right now, 2Ws account for up to 90% of all EV sales in India. The markets for 4Ws and 3Ws are smaller but still expanding. The low cost of ownership is helping these categories’ stable to rising penetration rates. But, it is clear that we need targeted actions to maintain and speed up this growth.
In the next 6–7 years, India’s EV market needs to grow to reach its theoretical revenue potential of $100 billion. Hitting this big goal will need work on new product development and sales strategies. It will need a focus on B2B markets, software innovation, and a big expansion of charging infrastructure.
We still need to do more work to create a strong EV ecosystem. To encourage EV adoption, we need complete government support, safer vehicles, and lower battery costs.
Conclusion
India’s EV expansion impacts manufacturers, dealers, and infrastructure planners, driving innovation, digital adaptation, and infrastructure development. This transition, supported by collaborative efforts across sectors, aligns with India’s sustainability and climate objectives.
The consumer shift towards EVs promises a transformative era in automotive, edging India closer to its climate targets and positioning it as a key player in the global EV market.
DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.
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