Electric Vehicle sales in India grew by nearly 47% to 1.5 million units in 2023

India, a significant player in the global automotive industry, is shifting its focus towards adopting alternative fuels to combat pollution. This strategic move comes after the country has expanded its consumer and vehicle bases and established local manufacturing facilities over the past two decades. The pivotal year in this transition will be 2024, as India, the world’s third-largest automotive market, grapples with the challenge of providing accessible growth capital to late-stage startups while simultaneously seeking to attract foreign electric vehicle (EV) manufacturers like Tesla to enter its domestic market.

In 2023, India, renowned as the world’s largest two- and three-wheeler manufacturer, recorded sales of nearly 24 million vehicles, encompassing commercial and personal four-, three-, and two-wheelers, according to the latest data from the government’s Vahan portal. Out of this total, more than 1.5 million vehicles were electric, constituting 6.35% of the overall base, with electric two-wheelers accounting for 813,000 units. Although the overall vehicle sales witnessed an increase of almost 10% from around 22 million vehicles in 2022, EV sales experienced a substantial growth of nearly 47%, reaching 1.03 million units in the previous year.

This brings the cumulative electric vehicle sales in the country to nearly 3.5 million, with two-wheelers contributing over 47% of the sales, four-wheelers representing approximately 8%, and the remainder attributed to e-rickshaws and three-wheelers. Despite the noteworthy annual growth in EV sales in 2023, it falls short of the remarkable figures recorded in the preceding two years, which saw growth rates of over 209% in 2022 and 166% in 2021. One contributing factor to the dip in EV sales is the reduction in subsidies provided to two-wheeler customers through the $1.38 billion incentive scheme known as Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles, or FAME-II. This policy change, implemented in June, led to a more than 56% decrease in monthly sales of electric two-wheelers in that month alone. The sudden decline in electric two-wheeler sales has arguably impacted the overall EV market in India, considering the country’s predominant focus on two-wheelers and limited manufacturers in the electric car segment.

Ravneet S. Phokela, Chief Business Officer of electric two-wheeler startup Ather Energy, acknowledged that the market experienced a setback for about three months due to the FAME-II update. However, he noted that the market has rebounded to pre-subsidy change levels as of October. Looking ahead, Phokela anticipates a more gradual growth trajectory, moving away from the previous trend of 100% quarter-on-quarter growth, and suggests that this shift will be beneficial in the medium-term perspective.