EV sales in India grew by 48 percent year-on-year in CY2023. A total of 15,26,319 electric vehicles were registered in the country last year compared to 10,25,116 in 2022. According to Vahan, a website that registers vehicles in India, 72,321 electric four-wheelers were registered in CY2023 while 32,260 were registered in 2022.

The government has a target of 30 percent EV penetration in private cars, 7 percent for commercial vehicles, and 80 percent for two and three-wheelers by 2030.

FAME II

Faster Adoption and Manufacturing of Electric Vehicles (FAME) was first introduced in April 2015, and Phase II was launched in April 2019. which is scheduled to end on March 31, 2024. It aimed to push the purchase of electric and hybrid vehicles by making them more affordable through financial support being offered under this subsidy scheme. It currently offers Rs. 15000 per kWh subject to a maximum of 15% of the vehicle cost.

Phase II of this subsidy aims to support 1 million electric two-wheelers during the tenure of the subsidy. Only those two-wheelers that can cover an 80 km distance on a single charge and can get a speed of at least 40 km/hr are eligible for the scheme.

The looming prospect of FAME subsidy removal could exert a significant impact, potentially resulting in a 17 to 20% uptick in the cost of electric scooters. However, as adoption increases, more technological breakthroughs are expected and economies of scale are expected to bring down the costs.

PLI

Ola Electric has become the first Indian e-scooter (e2W) company to become eligible for the government’s production-linked incentive (PLI) scheme. It is estimated that they will access benefits ranging from INR 15,000 to 18,000 per unit. Other major players like Hero MotoCorp, TVS Motor Company, and Bajaj Auto have also applied for the PLI scheme. To qualify for this scheme, e-scooter startups need to invest at least Rs 1,000 crore.

The PLI-Auto Scheme, which was approved by the Centre in 2021 with an outlay of Rs 25,938 crore over a five-year period, aims to boost domestic manufacturing of Advanced Automotive Technology products, including electric vehicles and their components. The scheme provides financial incentives of up to 18% of eligible eligible sales for electric vehicles and their components.

It is also worth noting that Ola Electric filed its DRHP with the SEBI last week. The IPO will consist of a fresh issue component of Rs 5,500 crore, along with an offer for sale (OFS) category of around Rs 1,750 crore, making it the first ever Indian EV company to file for IPO.

The entry of Tesla

The company looks all set to enter the burgeoning Indian electric vehicle (EV) market in the New Year after several years of dilly-dallying, giving the masses hope that owning a cheaper Tesla Model 3 may soon be possible with local manufacturing of battery components and a robust EV supply system. It is expected to be announced next week ‘Vibrant Gujarat Global Summit’ on January 10-12 as Gujarat, with its strategic location and favourable business environment, has emerged as the “preferred destination for Tesla’s manufacturing plans”.

If all goes well, Tesla can reportedly produce 5 lakh electric vehicles annually that starts from Rs 20 lakh, as the electric car-maker plans to set up its auto parts and electronics chain in India, along with incentives and tax benefits.

The Rise of Hybrid Vehicles

In sharp contrast to global trends, Indian customers prefer hybrid vehicles, which have a blend of combustion engines and electric motors, to pure-play electric cars that are powered entirely by batteries or BEVs for 4-wheelers. Car companies, quick to recognize this trait, have been luring the Indian clientele with 51 new model launches of hybrids compared with just 29 for EVs in 2023.

Hybrids have become favorites due to their reliability, affordability, and lower maintenance costs. Meanwhile, limited range, lack of charging infrastructure, and expensive insurance are concerns that the EV ecosystem needs to aggressively address to make its India ride smoother.