The electric vehicle (EV) revolution in India is accelerating, with EVs projected to account for 30-35% of annual vehicle sales by FY30, according to a new report. Despite this growth, internal combustion engine (ICE) vehicles will continue to dominate the roads, coexisting with EVs for years to come.
India’s EV market penetration has risen from less than 1% in 2019 to 7.4% in 2024. “With low vehicle ownership and unique growth drivers, India has a chance to leapfrog, making EVs the first car for many, just as it skipped 3G for 4G. By FY30, EVs could hit 30-35% of annual sales,” predicted the report by SBI Capital Markets (SBICAPS).
Batteries and electronic drive units, which make up 50% of an EV’s cost, are key differentiators from ICEs. India’s Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) aims to address this. Currently, original equipment manufacturers (OEMs) outsource 75% of their battery needs, but backward integration is expected to push this to 50% by FY30, driven by alliances and joint ventures (JVs) rather than purely organic efforts.
Approximately $6-7 billion in capital expenditure is expected to achieve 100 GWh of EV battery capacity by 2030, while another $2.4 billion will be required to expand public charging infrastructure to 90,000 chargers by FY30.
India’s EV boom rides on a web of incentives, including a 5% Goods and Services Tax (GST) compared to 28% for most ICEs, lower road taxes in many states, FAME and PM E-DRIVE subsidies, and cheaper operating costs when using electricity compared to petroleum products, thanks to a favorable tax structure.
“India’s EV incentive game is smartly targeted — PM E-DRIVE boosts specific vehicle classes and expands support for charging infrastructure. The Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) zeroes in on cars, where penetration lags. Plus, with global tech breakthroughs already paving the way, India can readily adopt mature solutions without reinventing the wheel,” the report elaborated.
EV adoption varies widely by category, with two-wheelers (2W) and three-wheelers (3W) leading the pack. According to the report, private cars represent a unique EV segment, where performance, design, comfort, and safety often outweigh cost considerations.
