How Are Hefty Government Investments Driving Electric Vehicle Demand in India?

 The government of India approved Phase-II of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) Scheme for 3 years commencing from 1st April 2019. The scheme has an outlay of Rs.10,000 crore. This phase aims to put 7,000 e-Buses, 55,000 e-four-wheeler passenger cars, 5 lakh e-three wheelers, and 10 lakh e-two wheelers on the roads of India. These numbers may vary in the future. This scheme will only incentivize advanced battery and registered vehicles. 

Thus, the incentives being provided by the central government will support the Indian electric vehicle market growth during 2020–2030. Additionally, the central government is offering subsidies on the purchase of electric buses, passenger cars, three-wheelers, and two-wheelers. The surging government support can be primarily attributed to the rising environmental concerns and soaring air pollution levels in the country. According to the 2020 World Air Quality Report, 22 of the top 30 polluted cities of the world are in India and most of the pollution in these cities can be ascribed to automotive fuel combustion.

India Electric Vehicle Market - P&S Intelligence

Nowadays, Hero Electric Vehicles Pvt. Ltd., Okinawa Autotech Pvt. Ltd., TVS Motor Co. Ltd., Olectra Greentech Ltd., Lohia Auto Industries, Ather Energy Pvt. Ltd., Terra Motors Corporation, Ashok Leyland Ltd., Saera Electric Auto Pvt. Ltd., Mahindra Electric Mobility Ltd., Electrotherm (India) Ltd., Tata Motors Ltd., and Toyota Kirloskar Motor Pvt. Ltd. are offering electric variants of two-wheelers, three-wheelers, passenger cars, and commercial vehicles to Indian customers. At present, the sales of e-three-wheelers exceed that of other EVs, due to the extensive demand for last-mile connectivity in the country.

According to P&S Intelligence, Gujarat dominated the Indian electric vehicle market in the recent past, due to the escalating environmental concerns, surging need for first- and last-mile connectivity, rising air pollution levels, and increasing government support toward EV production and adoption in the state. Furthermore, Uttar Pradesh is also expected to witness a significant sale of EVs in the coming years. The state will witness booming sales of electric two-wheelers and three-wheelers in tier 1 and tier 2 cities to bridge the first- and last-mile connectivity gap. 

Thus, the escalating government support in the form of subsidies and incentives will boost the production and sales of EVs in India in the coming years.