2022: The Year of Electric Vehicles in India: An Analysis of the Rapid Growth in EV Sales

By 2030, India wants all new cars sold there to be electric. Although this is a lofty ambition the Indian government has put into place a number of policies and measures to encourage the use of EVs in order to reach this aim, including tax incentives, subsidies, and investments in charging infrastructure. The rising customer knowledge of EV advantages including cheaper maintenance costs, zero emissions, and a more minor carbon impact is one of the key drivers boosting EV sales in India. In addition, the rising fuel cost in India has increased customer interest in EVs.

India has seen a sharp increase in EV sales in recent years. The Society of Manufacturers of Electric Vehicles (SMEV) estimates that 2.7 lakh electric vehicles will be sold in India in 2021, representing a 20% increase in sales. In 2023, this growth is anticipated to continue as major automakers prepare to introduce new EV models in India.

The government's initiatives to upgrade the nation's charging infrastructure are a significant element supporting the growth of EV sales in India. With plans to create more than 10,000 charging stations nationwide over the next three years, the government has set a goal of installing one station for every three electric vehicles in the nation.

However, a few obstacles still need to be overcome to hasten the adoption of EVs in India. One of the most significant issues is that many consumers need help to purchase EVs due to their high upfront costs. The government's incentives and subsidies are assisting in resolving this problem, but more has to be done to increase the availability and affordability of EVs for a wider variety of consumers.

Market Trend

The Indian EV market is growing by more than 200% in the last year alone, overtaking Japan to become the world's third-largest car market after China and the United States. The adoption of EVs is increasing day by day, it is important to understand how key markets are evolving with the introduction of electric vehicles. According to a recent report by Canalys, India will ship around 48,000 electric vehicles by 2022, a 223% year-on-year increase, due to the continued demand for clean vehicles.

As per the most recent data, new vehicle sales in India topped approximately 4.25 million units in 2022, and the volume is expected to rise further. India has an ambitious goal for EV market, and it expects that by 2030, 70% of all commercial cars, 30% of all private cars, 40% of all buses, and 80% of two-wheeler and three-wheeler sales will be for electric vehicles. This amounts to about 102 million in sales for EVs by 2023.

With an 86% market share in electric vehicles, Tata leads with two models, one of the most anticipated electric cars Nexon EV and Tigor EV. The second position in the market was acquired by MG's ZS EV followed by 9% and Hyundai's Kona with 1.6% is in third place.

India's leading automaker Maruti Suzuki aims to build hybrid and alternative fuel vehicles by 2023. The company has announced its first electric SUV, which is expected to go on sale within the next two years.

Tata's most successful electric vehicle costs less than Rs. 17 lakhs, making it the top choice for buyers in India. Tata is all set to launch the Harrier EV in 2024 and the Sierra EV near future. On the other hand, Luxury car brands such as Audi, BMW, and Mercedes-Benz have a lesser number of sales as compared to these affordable electric cars. However, as per the reports Mercedes-Benz and BMW recorded a good number of sales still it is less than 1% of the total market.

Hyundai also successfully acquired a major part of the market and emerged as the second-largest car market in India after Maruti. Hyundai recently unveiled its second electric SUV after Kona, the IONIQ 5.

As per the reports of Canalys, the government's three-year subsidy program FAME II will continue to accelerate EV adoption across the country through incentives for EV drivers and companies to boost the market. The report presented expects the Indian EV market to grow to over 3 lakh units by 2025 at a compound annual growth rate (CAGR) of 59% across the country.

In conclusion, even if it is too soon to say whether 2022 will be the "year of electric vehicles" in India, the rise in EV sales in recent years and the government's dedication to encouraging the adoption of EVs point to a positive future for EVs in that country.