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The electric car (e-car) market in India is expected to make up about 12 per cent of all passenger cars in the country by FY26, supported by improving ecosystem and faster adoption of electric vehicles on the back of factors such as lower maintenance costs and rising fuel prices.
The adoption of electric cars globally has witnessed a surge, with sales in the first half of 2021 already surpassing the 2020 numbers. Similar trends can be observed in India too.
The growth in the electric vehicle market in India is not at the same scale as in other countries. For instance, while the share of battery electric vehicles (BEVs) in the total number of passenger vehicles sold in Europe was 5.4 per cent, in India, it was a minuscule 0.2 per cent in FY20. However, with improving ecosystem, it is estimated that the share of e-cars will grow to 12 per cent of all passenger cars by FY26, clocking 5,14,365 units in e-car sales, which translates to a CAGR of 152.94 per cent from FY21 to FY26, says a report by JMK Research
E-car sales have increased in India post 2019, with a 361.78 per cent y-o-y increase in 2020. 2021 registrations, as of July this year, have further increased, having already crossed the 2020 sales figure.
Shift in focus
While positive steps have been taken by the Central government to promote and accelerate the growth of the EV ecosystem in India, the recent restructuring in FAME-II policies suggest that the government has shifted its focus to electric two-wheelers (E2Ws) to generate demand for achieving short-term growth.
According to JMK Research’s recent analysis, e-cars may demand a higher upfront cost versus its ICE counterparts, but the TCO over a 5-year and 10-year period will be 35-56 per cent lower for e-cars, depending on the driving scenario.
Nevertheless, there are some notable barriers when it comes to choosing e-cars over ICE cars, the major one being the lack of options in the market presently.
Over the last four years, the e-car sales in India have been driven by two players, namely Tata Motors and Mahindra, which together account for 80 per cent of the total market. E-cars of these companies are available for prices between ₹8 lakh and ₹14 lakh. However, the absence of options in the affordable segment (price < ₹8 lakh) could be a factor for slower adoption of e-cars.
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