Electric car sales in India may cross 7% by FY28

Business News, India, Electric Vehicles, Earth Elements, CareAge Advisory, Tesla, American EV Company

Business: The electric vehicles (EV) market in India is growing rapidly. According to a report, if the problems in the supply chain, especially related to rare earth elements, are resolved in time, then the share of electric cars in India can exceed 7 percent by FY28. This report was released by CareAge Advisory on Wednesday, the same day when American EV company Tesla officially announced its entry into India.

Electric car sales are growing rapidly

Electric car sales in India have grown tremendously in the last few years. According to the report, while only 5,000 units were sold in FY21, by FY25 this figure has reached above 1.07 lakh units. However, the two-wheeler and three-wheeler segments still hold the largest share in the EV market. But the four-wheeler segment is also now growing rapidly due to public policy and increasing support from the industry.

Government policy and new models will become engines of growth

According to Tanvi Shah, Senior Director, CareAge, "If the problem of rare earth materials is resolved in time, then electric car sales in India can cross 7 percent by FY28. There is a great opportunity for the EV sector in India due to the launch of new models, increase in charging infrastructure and battery localization under the Production Linked Incentive (PLI) scheme."

Steps like FAME III (Fame 3), PLI scheme for advanced batteries and exemption in custom duty on essential minerals of the battery by the government are helping to strengthen the local supply chain and reduce costs.

The charging network is growing rapidly
The biggest challenge facing EVs has been the lack of public charging infrastructure, which is now being rapidly overcome. While there were 5,151 public charging stations in India in 2022, this number has increased to more than 26,000 by the beginning of FY25. This growth rate has been more than 72 percent annually.

States like Maharashtra, Delhi, Tamil Nadu and Gujarat have initiated location-based incentives (from providing land to subsidy in capital expenditure). Along with this, municipal corporations are also now making EV ready parking mandatory in residential and commercial projects. Due to which buyers' concern about range is decreasing.

Private companies and charger standardization also increased speed
Private charge point operators (CPOs) are now rapidly expanding their network. And for this, they are also partnering with state governments and urban bodies. At the same time, national organizations like BEE and Niti Aayog are working on charger standardization and interoperability. So that the charging experience can be easy.

Battery supply chain is also getting stronger
The government has removed the basic custom duty on 16 minerals required for EV batteries in its latest budget. Which will further reduce the cost and also increase domestic production capacity. According to the report, while India was 100 percent dependent on lithium ion cell imports in FY 22. At the same time, by FY 27, this dependence can be only 20 percent. Because big investments are being made in battery manufacturing in the country.

Tesla's entry will further increase market confidence
With strong government policies, technological advancement and the entry of a global company like Tesla, India's EV market is now in a position to grow rapidly.