India's EV Path: ICRA Says Exponential Growth Expected by FY30

The penetration of electric vehicles in India’s overall automobile sales is expected to grow exponentially by the financial year 2030 from the current levels, according to research agency ICRA Ltd. Factors such as increased public awareness, government subsidies, new product launches, localisation of parts, and improvement in availability of finance are likely to boost demand for EVs. 

 Among vehicle segments, ICRA sees EV penetration in passenger vehicle sales grow five fold by FY30 to 15%, up from 2-3% seen at the end of the ongoing financial year. The sharp growth will be led by expansion of product portfolio by automakers, improved charging infrastructure, lower battery prices, and lower running cost of electric PVs, the research agency said in a report.   

By FY30, ICRA also expects to see a sharp increase in the EV penetration in bus sales to 30% from 7-8% in FY25, and in light commercial vehicles it is seen at 12-16%, up from 1-2%. The demand in these segments is expected to be backed by government support, lower cost of ownership, and declining battery prices. 

Growth will be aided by “the continued support from the government through the ‘PM E-DRIVE Scheme’ and the extension of the support system to the entire ecosystem, wherein technology related aspects are being taken care into the incentive bracket. We expect that it is a matter of time. The shift towards a higher penetration is going to happen,” said Srikumar Krishnamurthy, Vice President and Co-Group Head at ICRA. 

Currently, the government of India offers subsidies for electric vehicles under the PM E-Drive scheme and it also provides production linked incentives. The PM E-Drive has a total budgetary outlay of Rs 10,900 crore for two years. The scheme provides subsidies on the purchase of electric two-wheelers, electric three-wheelers, electric trucks and buses as well as electric ambulances. 

Apart from these, the scheme will also support 88,500 electric vehicle charging sites excluding electric cars from the scheme. Meanwhile, the PLI scheme aims to boost domestic manufacturing of advanced automotive technology products. 

Beyond the PV segment, ICRA expects EV penetration in overall sales to grow to 25% in two-wheelers and 40% among three-wheelers by FY30. While EV sales in two-wheelers are seen growing three-fold from 6-7% in FY25, the penetration in three-wheelers is seen doubling from the current 20%. 

“From a volume standpoint, two wheelers represent 75% of the overall EV sales. But from a penetration standpoint we still see two wheelers at only 6% because it is largely represented by scooters. The motorcycles are yet to have a meaningful impact in the EV space. Three wheelers have quite a decent EV penetration numbers around 20 plus percentage,” said Krishnamurthy.