Electric Vehicle Market, India, 2023 2030

The Impact of the Top 3 Strategic Imperatives on the Indian EV Market

Competitive Intensity

• Why: Domestic companies such as Tata dominate the Indian car and sports utility vehicle (SUV) market. These companies better understand consumer preferences and market dynamics and have strong distribution channels and service networks.

• Frost Perspective: Multinationals in India, such as Hyundai, Kia, MG, Toyota, and Maruti Suzuki, plan to launch vehicles and strengthen their EV support system through joint ventures (JVs) and partnerships. For example, Renault is considering building a mass-market EV in India.

Transformative Megatrends

• Why: Omnichannel integration for EV retailing (by implementing exclusive online/digitalized sales models) will enhance existing business models and pave the way for price competitiveness for original equipment manufacturers (OEMs).
• Frost Perspective: OEMs will improve revenue generation potential by implementing online retailing through enhanced data monetization opportunities with greater control over customer data and sales networks. OEMs can transfer the benefit of reduced retail spending lowering vehicle prices.

Industry Convergence

• Why: The lack of charging infrastructure and high initial cost make consumers hesitant toward EVs, which cost 25% to 50% more than conventional vehicles because of the high cost of technology (in batteries, motors, on-board chargers, and power electronics).
• Frost Perspective: Policymakers have introduced cash incentives for purchases and other reoccurring incentives to increase the market uptake of EVs. The situation will improve with the government promoting sustainability goals and encouraging EV use through the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.

Competitive Environment

Key Competitors

• Tata

• MG

• Mahindra

• BYD

• PCA Automobiles

• Hyundai

• BMW

• Volvo

• Mercedes Benz

• Kia

• Audi

• Porsche

• Jaguar Land Rover

Growth Drivers 

Incentivization and Subsidies 

Incentivization, such as tax credits and subsidies, makes EVs more attractive and affordable for car buyers. 

Rising Fossil Fuel Prices 

Higher tax impositions on petrol and diesel will increase fuel prices in India, which are already significantly higher than in Southeast Asia.

Environmental Concerns

Vehicular emissions result in 23% of greenhouse gas emissions, and 63 Indian cities are among the most polluted 100 cities globally. 

Foreign Investments and Collaborations Production-linked incentive schemes will boost domestic manufacturing, drive innovation, and accelerate the EV ecosystem. 

Fiscal Impact India ranks 3rd globally in oil spending, and increases in crude oil prices enlarge the government's account deficit. 

Growth Restraints 

Limited Focus on EVs by Native OEMs 

Primary native mass OEMs, such as Maruti, have not launched EVs in the market but plan to introduce them in the coming year. 

Presence of Cost-conscious Buying Groups 

The cost of EVs is 25%–50% higher than conventional vehicles because of the high cost of technology inclusions. 

High Dependency on Imports for EV Components

India is in the nascent stages of attracting investments, and increased dependency on imports negatively impacts the supply chain. 

Uncertain Residual Value of EVs 

Technology advancements and battery degradation impact EV resale value, although this may change as the ecosystem evolves. 

Range Anxiety 

The current range of 150 kilometers (km) to 200 km on mass-market EVs makes it preferable for urban/city use and limits growth among intercity travelers.