We’ve spent the last 6 months building this Thesis on India’s EV opportunity. With the sector on track to be a $100B opportunity and is all set to be disrupted with a 30% CAGR growth. If you’re building / investing / working or are just curious about India’s EV sector - this is for you.
This Thesis covers the following aspects:
Batteries
Supply Chain
Charging infra
2/3/4 wheelers
Access to credit
Cost of ownership
Cell manufacturing
Indian govt policies
Recycling / upcycling
The climate question & more
This Thesis runs over 30,000 words & 100 pages. We’ve been fortunate to partner with marquee names like Rainmatter, Better Capital, Blume Ventures, Nexus VC, Gruhas, 2AM VC, AJVC, BluSmart, Log9, Bolt.Earth, Oben Electric, & 100s of experts who’ve contributed to this Thesis.
This report is just the tip of the iceberg.
At GrowthX we have built a members-only community of 3,000+ leaders from companies like Jio, Freshworks, Zepto, Razorpay, CRED, Microsoft & 1,800+ more.
India is the world’s 3rd biggest automobile market and has been fighting for the no#1 spot with China in the 2W & 3W market. The Indian automobile space is huge but so are the concerns.
India currently imports 80% of its crude oil, which powers everything from gasoline to diesel. We’re also the 3rd most polluted country globally, with transportation contributing ~12% of our CO2 emissions.
This is where the EV push comes in with 2 benefits: economic growth and climate change mitigation. India’s EV push isn’t just about flashy Teslas on the road—it’s about addressing real economic and environmental needs. Let’s dive deep.
India took 3 targets at COP26:
Achieve net-zero emissions by 2070.
Ensure 30% of new vehicle sales are electric by 2030.
Reduce emissions intensity by 45% by 2030 from 2005 levels.
COP is short for “Conference of the Parties"—an i international climate meet held each year by the UN. More than 100 countries, cities, financial institutions, and automakers signed the Glasgow Declaration on Zero-Emission to end the sale of internal combustion engines by 2035 in leading markets, and by 2040 worldwide.
COP26 introduced "The Global Carbon Incentive Fund," where every country that emits more than the per capita global average pays into a global incentive fund. India could get $37 billion annually, while the U.S. may pay $38 billion. Yes, you read that right.
A quick history lesson:
EVs might seem like the latest piece of technology, but you'd be shocked to know that EVs date back to the 1800s. In fact, EVs were once preferred over noisy & expensive petrol engines. Back in 1889-1891, America’s witnessed its first successful and commercially available electric car. India’s journey with EVs started nearly a century later.
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India's 1st EV: 1993
India’s early steps into electric mobility began with the Eddy Electric series and the Lovebird model, followed by Scooter’s India Pvt. Ltd. introducing the Vikram Safa. In 2000, BHEL experimented with electric buses, but the major turning point came in 2001 with the REVA. As India’s first commercially successful EV, the REVA sold around 4,600 units globally, with India contributing to 55% of those sales—40% of them from Bangalore. In 2006, EV2Ws finally made their debut with Yobykes.
It's ironic that in a country like India, where a 2W is often the first vehicle most households, 2W were the last to be introduced in the EV wave. But now, the script has flipped, 2Ws are leading the wave and we'll talk about more on it.
Early EVs were intriguing but impractical due to high battery costs, limited range, and a lack of charging infrastructure. Today, India is one of the fastest-growing EV markets, and more Indians are embracing owning an electric vehicle.
Yet, there's a long way to go. The government is pushing hard. But, now that we have some context, let's peak into the market snapshot.
Indian Market Overview
Find the "why" of this:
Two wheelers lead in sales count: every 2nd EV sold in India is an E2W.
FY 2024: E4Ws have only 3.9% penetration, while passenger E3Ws dominate with ~56%.
E4Ws saw a 109% YoY increase, largely due to the base effect.
Btw, India has taken some bold EV penetration goals: India has committed to bold decarbonisation targets at the COP26. By 2030, the goal is to cut carbon emissions from the energy sector by 50% and ramp up renewable energy capacity to 500 GW.
Currently, the nation is only at one-third of this capacity. To meet these ambitious goals, India is part of the EV30@30 initiative, aiming for electric vehicles (EVs) to make up at least 30% of all new vehicle sales by 2030.
This includes ambitious sector-specific targets: 40% of buses, 70% of commercial cars, and 80% of two- and three-wheelers transitioning to electric.
But we have a huge runway – for context, in 2023, EVs accounted for only 6.3% of total auto sales in India.
India's EV Snapshot
Where do we stand in sales?
E2W: Despite a 25% subsidy cut in June, the two-wheeler segment sold 8.4 lakh units in CY23, marking 33% year-on-year (YoY) growth. Top OEMs like Ola, TVS, & Ather led the market. The rebound in sales post-subsidy cut reflects market maturity and resilience.
E3W: This segment witnessed the sales of 5.7 lakh units, a 63% YoY increase. Sustained demand for last-mile mobility, including passenger transportation and e-commerce deliveries, drove this growth.
Passenger Vehicles: Electric passenger vehicle sold 80,030 units, representing a 109% YoY increase. Despite higher initial costs –consumers increasingly preferred EVs, particularly SUVs, sedans, and hatchbacks.
Commercial Vehicles: The commercial vehicle segment saw total sales of 5,268 units in CY2023, up 101% YoY.
How does the penetration look?
India is seeing a "bottom-up penetration," – similar to that of China and other Asian countries. The most affordable vehicle is where people have accepted EVs both for personal and commercial use-cases. The next few graphs below speak for themselves.
The energy transition, both at the grid & household levels, will be a focal point for decades. The need for renewables is not only now on paper but also being financed and implemented at scale and at pace - we are seeing this happen globally.
Transportation/mobility accounts for 10-15% of energy related emissions in India today, and scalable and sustainable alternatives to fossil fuels will help mitigate some of that emission. This is where EVs come into play. Would also like to add that, while there is always a need for R&D, a lot of impact will also come from Indian entrepreneurs building cost-efficient wrappers around technology that is available in the EV sector to hit the ground running.
Dinesh Pai
Business and Investments, Zerodha and Rainmatter
EV Penetration Growth
Penetration wise, E3Ws are leading the game. But things change drastically if you look at the unit sales level. Sales wise – E2Ws are being sold ~40% more than E3Ws.
E2Ws form the majority of EV sales today, making ~57.6% of all EV units sold in FY 2024 in India, followed by 3W EVs with ~32%.
India's EV 2W Snapshot
India's EV 3W Snapshot
Many of these vehicles are simply assembled kits from China. The real challenge isn't the cost of producing an EV; it's the underestimated costs of brand building and distribution.
Kunal Khattar
Founder of the mobility-focused Venture firm, AdvantEdge
According to a press release by Ministry of Heavy Industries, 3W EVs in India enjoy the highest category split – every second 3W in the country is an EV.
India’s 3W EV adoption is miles ahead of the rest.
We'll discuss each category in more detail in a separate section "Category Split". But for now, one interesting thing to note is the stark difference between the two hottest categories. In E2Ws, big names like Ola & Ather dominate, but the E-carts & E-rickshaw segment is ruled by smaller, independent players. The space is ruled by unheard companies like YC Electric, CityLife & Saera Electric to name a few.
In India, it’s clear that both 2Ws and 3Ws are leaving the pricier electric four-wheelers far behind in terms of sales. This reflects the country’s focus on affordable last-mile mobility and intra-city solutions. Now, let’s explore how other markets around the world compare to understand these unique consumption patterns better.
Category Split 2, 3, 4 Wheeler
Find the "why" of this:
E3Ws have the highest EV penetration in India (every second E3W sold is electric), but E2Ws lead in overall sales.
Newer players like Ola Electric and Ather, along with traditional brands like TVS and Bajaj, hold a significant share of the E2W market.
E4Ws have the lowest EV penetration, with Tata Motors dominating this segment.
The rapid adoption of E2Ws and E3Ws is driven by last-mile delivery and logistics needs.
E-buses are seeing increased adoption due to strong policy support, including the NEBP and eBus Sewa schemes.
India’s EV sector includes:
Electric two-wheelers (E2Ws)
Electric three-wheelers (E3Ws)
Electric four-wheelers (E4Ws)
Electric buses (E-Bus)
Types of EVs popular in India & Upcoming
Peaking into the EV 2W world
The two-wheeler segment dominates the Indian automobile market, accounting for more than 70% of all registered vehicles. This existing infrastructure and consumer familiarity with two-wheelers makes them a natural starting point for electrification efforts which can be seen in the e2w adoption trend in the country.
But that's not all - the rising dependancy on e-commerce, quick-commerce and food delivery has became a major tailwind.
2W Unit Sales in Lakhs (ICE vs EV)
While E3W comes out on top when it comes to EV penetration in the country, the market share of E2W in the total electric vehicle market is an impressive 56% as of CY 2023. The share of E2W grew at a CAGR (Compounded annual growth rate) of 176% from FY 2021-24.
Why are E2Ws dominating the Indian EV market?
A. Affordability
The affordability of two-wheelers in India has been challenged by the escalating Total Cost of Ownership (TCO) and a steep 60% rise in petrol prices since 2020. This factor plays a pivotal role for Indian consumers when choosing between electric (EV) and traditional internal combustion engine (ICE) two-wheelers. Thus, the spurring demand for electric two vehicles is due to their greater efficiency and lower cost of electricity for charging it as compared to petrol or diesel.
The E2W makes economic sense for the Indian 2W users, as the total cost of ownership (TCO) is 20- 70% lower than an ICE equivalent 2W. We talk about TCO in detail after a few sections.
B. Growing demand for last-mile deliveries
In recent years, there has been a notable rise in last-mile deliveries, further accelerated by the pandemic's emphasis on doorstep delivery services. However, one of the biggest challenges in the last mile is that it can upto 41% of the total supply chain expenses.
One effective strategy to address this challenge is adopting Electric Vehicles (EVs) at the driver's end, which reduces fuel costs and increases net income by 30-40%. According to WRI India's Total Cost of Ownership (TCO) analysis, electric two-wheelers (e-2Ws) offer significant economic advantages over their Internal Combustion Engine (ICE) counterparts:
For an average daily travel distance of 50 kilometers, the TCO per kilometer is approximately 57% less for low-cost e-2Ws using Lithium-ion batteries.
As vehicle usage increases, the economic attractiveness of e-2Ws becomes more evident, presenting a substantial business opportunity in last-mile and hyperlocal delivery services.
As a result:
Amazon aims to deploy 100,000 electric delivery vehicles by 2030 to reduce its carbon footprint and operational costs.
DHL uses electric bikes in urban areas for efficient and cost-effective deliveries, cutting down on time and expenses.
Zomato is partnering with EV-as-a-Service provider Zypp to electrify 100,000 vehicles by 2024 for their last-mile deliveries.
Uber and Rapido are also electrifying their fleets with Zypp Electric to enhance their last-mile ride-sharing services.
Who is winning the electric 2W game?
Two Wheeler EVs market share
The top 3 players dominate 60% of the market share in the E2W segment with OLA alone contributing a massive 33%.
This wasn’t the case until 2022, when OLA had a 17.8% market share then, and TVS Motor — the second biggest market leader was only 8%.
It's interesting to see how startups are beating the legacy boys in the new EV world.
Market Share of E2W OEMs in CY23
Ola Electric continues its dominance in the Indian electric two-wheeler (E2W) market, having the top spot for two years running. Since its entry in 2021, the company has achieved a staggering 141% year-on-year growth in 2023, disrupting the segment. Ola Electric's understanding of the Indian market has fueled its success. Their five electric scooter models cater directly to the needs of existing ICE customers, and their expanding network ensures easy access for all.
In contrast, Hero Electric and Okinawa, once key players, struggled in 2023. The government halted their subsidies in August due to non-compliance with localization norms, specifically the 50% requirement. This policy shift has negatively affected their sales
Entry vs Best Selling Models
Bestselling vs Cheapest model of Top 3 OEMs
After reviewing the price points of these competitors, one notable reason for OLA Electric's market leadership is its affordability, selling electric two-wheelers (E2Ws) at cheapest price compared to competitors.
Additionally, the high penetration rate of E2Ws suggests that buyers are increasingly aware of the long-term benefits of EV ownership.
Despite the higher upfront costs, the significantly lower operational expenses over time make EVs a compelling choice for cost-conscious consumers.
The Rise of India's new-age E-Bikes
Electric bikes in India have surpassed initial expectations, with startups pushing the boundaries of what's possible. Today’s electric motorcycles are not only sleek and futuristic but also highly functional. Range anxiety is becoming a thing of the past, as many models now offer over 300 km on a single charge—more than enough for a 10-day commute for the average Indian. These bikes can accelerate from 0 to 40 or 60 km/h in just 3 seconds.
Many brands are focusing on perfecting a single model, adopting strategies of specialization, precision marketing, and streamlined operations. For example, Oben Electric’s focus on refining one model has proven the effectiveness of this approach. We can expect more single-model and limited-model brands to emerge as companies prioritize innovation over variety.
Ultraviolette has set a high bar with India's first lineup of high-performance electric motorcycles launched six years ago. Other notable players in this segment include Oben Electric andRevolt Motors, each company offering a unique user experience in looks and features.
India's Modern EV Bike Revolution
Peaking into the EV 3W world
India has now overtaken China to become the biggest market of electric three-wheelers globally, recording a sales figure of over 5,80,000 in 2023. India has seen seen an EV breakthrough in 3W category. So much so that 1 out of every 2 three-wheelers sold is electric.
India’s E-3W market is so big that one in five three-wheelers sold globally in 2023 was electric and nearly 60% of those were sold in India - as per the International Energy Agency.
Electric 3W sales share by region, 2015 - 2023
In CY2023, electric three-wheeler cargo vehicles accounted for over 50% of total sales within their category. This segment has been experiencing steady growth.
The thriving logistics and e-commerce sectors have been pivotal in driving the demand for cargo vehicles, encompassing both electric (EV) and internal combustion engine (ICE) variants. Favorable cost economics have prompted leading e-commerce brands such as Flipkart and Amazon to partner with manufacturers like Magenta Mobility and Mahindra for emissions-free last-mile deliveries.
While E3W are the second highest type of EV sold in the country, they are certainly unmatched with penetration rates as high as 54%.
There are 3 types of E3W: Rickshaw, Carts and L5 Vehicles
To delve deeper into the factors driving the high penetration of electric three-wheelers (E3Ws), let's analyze this category further:
Feature Comparison E-Rickshaw, E-cart and L5 Categroy E3W
Now, let’s look at the sales trend for each category separately:
A. E-Rickshaw
E-rickshaw refers to low-speed electric 3Ws (up to 25 kmph) used for passenger transportation.
E-Rickshaw Sales for Top 5 OEMs
The e-rickshaw market is experiencing growth. This is evident from the fact that most dealerships have a positive year-over-year growth rate. However, this growth is unevenly distributed across dealerships.
Hotarge Corporation has the highest percentage growth Y-o-Y at 52%, whereas Mahindra & Mahindra has the lowest percentage growth Y-o-Y at -59%. It feels like Hotarge Corporation almost ate up Mahindra’s share.
“Big-name companies won’t set foot in the e-rickshaw industry, they know it’s not their segment. The buyer is not looking for aesthetics. The vehicle should be durable.”
Pawan Kakkar
Director, YC Electric
B. E-Cart
E-cart refers to low-speed electric three-wheelers (up to 25 kmph) used for goods transportation.
E-Cart Sales for Top 5 OEMs
While YC Electric and Dilli Electric remain the biggest players in the E- Cart segment, Sahnianand E Vehicles and Cart India had explosive year-on-year growth with 940% and 2733% respectively.
However, please be mindful that the electric vehicle domain is extremely dynamic especially when it comes to smaller players. If we look at the same data from one month after (Apr 2023), the dynamics will completely change.
E-Cart Sales for Top 5 OEMs
C. L5 Category E3W
Category L5 refers to a three-wheeled motor vehicle that exceeds 25 km/h in maximum speed or has motor power greater than 0.25 kW.
E-3W Goods L5 Sales for Top 5 OEMs
E-3W Passenger L5 Sales for Top 5 OEMs
The E-3W Passenger and Goods L5 sales market appears to be dominated by two Original Equipment Manufacturers (OEMs), Mahindra and Mahindra and Piaggio Vehicles. TI clean mobility has a significantly higher year-on-year growth rate at 22900% in the L5 passenger segment.
It is important to consider that the chart shows the percentage growth, not the actual number of vehicles sold.
Best and cheapest selling model of top 3 EV OEMs
Comparison Cheapest Model vs Best Selling Model
When it comes to YC Electric, their most affordable model is also their best-selling one. However, these vehicles are usually used for short-distance travel. In contrast, Mahindra and Mahindra dominate the L5 category, where vehicles cover longer distances. In this segment, buyers prioritizes features and capacity over price.
Why do E3W have the highest penetration?
A. Government Initiatives:
The reason behind the growing acceptance of electric three-wheelers is the constant effort taken by the Central and state governments that has encouraged citizens to move towards EVss
Sudhanshu Agrawal
EVP, Electric vehicle business & exports, Piaggio India
The company has three electric models in the goods carrier space and two passenger carriers. The FAME II scheme provides support to electric three-wheelers priced under ₹5 lakhs. There is a subsidy of 10,000 per kWh depending on the battery capacity, with a cap of 20% of the vehicle cost, whichever is lower.
B. Lower Total Cost of Ownership:
Despite the upfront price being 55% higher than for its gasoline equivalent, the average electric 3W model (auto-rickshaw) is more than 50% cheaper to own after 8 years of service, and even without subsidies is over 40% cheaper.
Food for thought: India's three-wheeler industry is leading the country's transition to electric vehicles due to their high usage, low operating costs, government initiatives, improved infrastructure, and environmental concerns. The three-wheeler industry in India is poised for significant growth in the coming years, driven by the adoption of EVs. With government support and increasing awareness among consumers, the transition to electric three-wheelers is likely to accelerate, leading to a cleaner and greener future for the country.
Peaking into the EV 4W world
With penetration rates as low as 2.20% in CY 2023, the E-car segment owns about 5.38% of the total EV segment in the country.
India's EV Car Snapshot
Tata Motors is the leading electric car manufacturer in India by a significant margin. They hold nearly 70% of the market share. MG Motor is the second-largest electric car manufacturer, but it has a much smaller market share than Tata Motors, at around 14%.
Best and cheapest selling model of top 3 EV OEMs
Best and cheapest selling model of top 3 EV OEMs
What makes Tata Motors the undisputed market leader in the E4W space?
Tata Motors has solidified its leadership in India's EV market throughout FY22, driven by a series of new product launches and positive customer reception. The company has strengthened its position with innovative fleet-mobility solutions, an expanded sales and service network, and enhanced charging infrastructure.
Tata Group's ambitious plan to create a comprehensive electric vehicle ecosystem in India involves:
Tata Power: Facilitating charging access with home installations and public stations.
Tata Chemicals: Developing and manufacturing batteries, including a pilot plant for lithium-ion battery recycling.
Tata Motors Finance: Providing financing solutions for EV purchases.
Tata Motors: Designing and manufacturing electric vehicles.
Tata Elxsi: Advancing connected car technologies and driver assistance systems.
Tata Digital: Creating a platform for an enhanced user experience and cross-selling opportunities.
This plan ensures all Tata models qualify for government benefits by meeting the 50% domestic value addition requirement. Also, fun fact: every 4th Tigor sold is an EV and every 6th Nexon sold is an EV.
Tata UniEVerse
Why startups can win in 2W & 3W space?
If you notice, in the E2W and E3W segment, new-age brands lead the way with a majority market share of 33% by OLA and highest sale in 3W categories by 10 year old companies YC.
This means that as a new-age brand, entering the E2W and E3W market may be easier compare to E4W.
When it comes to the E4W segment, it is a monopoly of a legacy brand - Tata Motors with a 69% market share. Ola will most likely be the first startup to get into EV Cars. A car is a 10 times bigger investment in a product which involves high capital expenditure and R&D to make. Also, the car purchase decisions are also guided by "brand trust"– which legacy incumbent brands have already cracked.
The EV B2B Tailwinds
We’ve examined E2Ws and E4Ws from the perspective of private use, but they’re also proving valuable in the B2B space. Their higher upfront costs are offset by lower total ownership expenses, making them ideal for businesses requiring transportation solutions.
These vehicles are especially effective in last-mile deliveries, which employs around 1 million individuals, and in ride-hailing services, which handle thousands of trips daily.
A. Fleet & Delivery Service providers
Electric two-wheelers (E2Ws) are leading the EV charge in last-mile deliveries due to their agility, affordability, and suitability for shorter trips within urban areas. Last-mile delivery accounts for 41% of the overall supply chain costs.
EV in B2B space will generally be used for last-mile delivery. A delivery executive for an ecommerce company using their own bike to deliver packages gets paid around ₹3-4 per km.
A major player in the e-scooter space, Zypp, currently operates over 21,000 vehicles and aims to scale up to 200,000 e-scooters across 15 Indian cities by 2026.
In 2022, Zypp partnered with Zepto, facilitating over 20,000 deliveries daily.
Zomato has also joined forces with Zypp to deploy 100,000 e-scooters by 2024.
Ride-hailing giants like Uber and Rapido are negotiating with e-scooter manufacturers, including Zypp and Bounce, to transition their fleets to electric and offer vehicles at lower costs to drivers.
As of 2022, their strategic partnership with multiple logistics and e-commerce companies has helped in reducing 17 million+ Kg of carbon emissions in the last 24 months, it added.
Recognizing the potential, Zypp has entered the E3W cargo business with plans to surpass 1,000 electric L5 loaders in their fleet.
2. Yulu
A pioneer in the e-bike rental space said its bikes have been used to make 100 million e-commerce deliveries with a fleet size of 30,000 vehicles, operating in Bengaluru, Mumbai (including Navi Mumbai), Delhi, and Gurugram as of today.
In 2023, Yulu partnered with Zomato to provide 25,000-35,000 of its DeX e-scooters for deliveries.
The same year, Yulu also teamed up with Zepto to deploy 20,000 DeX scooters.
These partnerships highlight the growing synergy between EV companies and delivery platforms.
Yulu’s "no-license and no-training vehicles" make delivery work easy for city migrants, providing income opportunities.
In India, solving the challenge of short-distance travel—getting from your doorstep to the nearest transportation hub—remains a significant need. We are excited to collaborate with innovative startups like Yulu, who are shaping the future of mobility and potentially redefining vehicle ownership
Vaibhav Domkundwar
CEO, Better
According to a Uber executive, Uber's current fleet includes fewer than 4,000 electric cars, which represents just 2% of its total fleet.
Operating EV fleets is challenging for companies like Uber and Ola due to their dependence on third-party infrastructure. BluSmart addresses this by developing its own infrastructure alongside operating EV fleets, creating a more integrated ecosystem.
However, this capex heavy approach involves extensive complexity, including managing charging logistics, ensuring infrastructure reliability, and scaling operations.
Uber also teamed up with Zypp Electric for 10,000 EV two-wheelers in Delhi by 2024. Uber Auto and Uber Moto together amount to over 50 per cent of its ride bookings in India.
3. Tata Motors
Amazon partnered with Tata Motors to deploy electric Tata Ace four-wheelers boasting a 210 cubic feet capacity and a range exceeding 120 kilometers. This showcases the potential of E4Ws for longer-distance deliveries.
B. EV Ride-Hailing Wave
EV cars are still in their early stages of adoption for passenger travel due to higher upfront costs and range limitations. But there is a shift coming due to electrification targets taken by the big players like Ola and Uber. There have also been rise of EV only cab providers like Shoffr & BluSmart. BluSmart has become South-East Asia’s biggest electric fleet company in such a short time.
BluSmart is a unique startup that is also solving for charging infrastructure by developing its own infrastructure alongside operating EV fleets, creating a more integrated ecosystem. This capex heavy approach involves extensive complexity, including managing charging logistics — so far have more than 50 charging hubs.
This higher demand calls for higher supply of cars. Tata Motors has pledged to sell over 50,000 EVs to various cab companies' fleets within the next three to five years. Despite EVs making up less than one-fifth of its total sales, Tata Motors leads in this market. The Xpres-T, a fleet-specific electric sedan launched in 2021, has been particularly successful with ride-hailing firms. Around half of the 50,000 EVs are slated for Uber India over the next three years.
EVs due to their eventual lower cost of ownership, could result in new large mobility startups and business models in ridesharing. Being more sustainable and economical could be attractive to consumers and businesses. Opens a new go-to market for startups
Aviral Bhatnagar
Founder and Managing Partner (A Junior VC)
Fun fact: Uber also teamed up with Zypp Electric for 10,000 EV two-wheelers in Delhi. This can be interesting as both 2W and 3W are preferred by many users due to cheap commutes. In fact, Uber Auto and Uber Moto together account for over 50% of ride bookings in India.
Uber's current EV fleet represents just 2% of its total fleet. Operating EV fleets is challenging for companies like Uber and Ola due to their dependence on third-party infrastructure.
Some lesser-known players in this sector include Evera, which forged a partnership with Adani TotalEnergies in 2023 to establish charging infrastructure in Delhi. Another notable player is Snap-E Cabs, which operates predominantly in Kolkata and has a fleet of around 600 electric cars. B2B fleet management service is another emerging market in this segment.
They are designed to optimize the operation and maintenance of a fleet of vehicles owned or leased by a business. They are not manufacturers. Some examples of B2B fleet management companies include Lithium, Moove, and Everest. For ex: Uber launched "Uber Green" with plans to add 25,000 electric cars to its fleet in major cities in partnership with Lithium, Moove, and Everest.
Out of curiosity, we asked the founder of Shoffr, Vikas Bardia if they take help from fleet management companies and they said
We along with being a ride hailing startup also manage our own fleet operations.
Vikas Bardia
Founder, Shoffr
EV Bus Snapshot
Electric buses make up a very tiny percentage (0.17%) of the total EV sales in CY 2023, however, India is setting its sights on a major green transportation transformation: rolling out 50,000 electric buses across the country by 2027.
India's EV Bus Snapshot
Market-share of E-Bus players
The market for electric buses in India is growing rapidly. Year-over-year (YoY) E-Bus sales in India are at 3,708 units in FY 2024, which is a significant increase.
Other key players include JBM Auto and Olectra Green Tech, with market shares of 14.16% and 14.08% respectively in FY 2024. Notably, Olectra Green Tech's market share has fallen from 22.16% in FY 2023.
Tata Motors is dominating the Indian electric bus market, holding a substantial 48% market share in FY 2024. This is a dramatic rise from just 6.6% in FY 2023, reflecting a remarkable 41.4% growth.
Tata's dominance in E-bus space
Expanding on Tata Motors’ dominance in the E-bus segment, they have deployed over 1,700 units in FY24, bringing their total fleet to 2,600.
Delhi Transport Corporation (DTC): Tata Motors, through its subsidiary TML CV Mobility Solutions, secured a deal to deploy 1,500 electric buses over the next 12 years in New Delhi as of December 2023.
Bengaluru Metropolitan Transport Corporation (BMTC): Tata Motors won an order for 921 electric buses in 2022.
West Bengal Transport Corporation: Tata Motors received an order for 1,180 e-buses.
Brihanmumbai Electric Supply and Transport (BEST): Tata Motors delivered 26 AC electric buses as part of an order for 340 e-buses under the central government's FAME-II scheme. However, Tata Motors was disqualified from a separate tender for 2,100 e-buses on "arbitrary grounds."
These moves solidify Tata Motors' role as a primary OEM for several key cities in India’s e-bus segment.
Efforts made to increase E-Bus adoption
A. US & India collab:
The US and India have established a $390 million joint finance mechanism for electric buses. The US contributes $150 million from government and philanthropic sources, while India adds $240 million. This fund aims to provide loans to electric bus manufacturers to boost production and meet increasing demand.
B. NEBP Scheme:
The National Electric Bus Program (NEBP), launched in 2022, aims to deploy 50,000 electric buses. As of May 2023, however, only about 1.25% of India’s total registered buses (359,432) are electric.
C. FAME Scheme:
The Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme, unveiled in 2019 with a ₹10,000 crore budget, aimed to deploy 5,595 electric buses across 64 cities. Yet, by November 2023, only 3,487 e-buses had been supplied.
Unlike FAME I, which allowed flexibility between outright purchase and gross cost contracting (GCC) models, FAME II has restricted options to GCC. This model, where payments are based on kilometers traveled, shifts operational risks to the operator or OEM. While this might sound efficient, it’s a tough sell for cash-strapped public transport agencies. Estimates from the Ministry of Road Transport reveal that 56 state transport undertakings are grappling with a combined loss of about ₹17,000 crore.
Gross Cost Contracting (GCC) Models involve leasing with payments based on kilometers traveled. Given the financial challenges faced by public transport agencies, e-bus manufacturers and intermediaries have been hesitant to engage in tenders issued by the government's EV procurement agency.
According to estimates from the Ministry of Road Transport, nearly 56 state transport undertakings across the country have incurred a combined loss of approximately ₹17,000 crore.
D. PM-eBus Sewa Scheme:
The Cabinet’s recent approval of the PM-eBus Sewa scheme, worth a staggering ₹57,613 crore, marks a bold step forward. The central government will contribute ₹20,000 crore to this 10-year initiative aimed at deploying 10,000 electric buses across 169 cities. The scheme promises to enhance city bus services, create up to 55,000 jobs, and foster green initiatives like bus priority lanes, multimodal interchange facilities, and charging infrastructure.
This initiative, executed through a public-private partnership, could be the catalyst for a major shift in urban transportation, but it remains to be seen how quickly and effectively it will roll out.
Studies show that e-buses are more cost-efficient to operate compared to diesel/CNG buses, especially with rising fuel prices.
EV Buses are more economical than diesel buses:
he cost of running a diesel bus is roughly ₹115/km, whereas cost of running an non-AC bus is ₹39/km and ₹41/km for AC bus.
In the case of Pune’s PMPML, the rate of electricity/km for 9m and 12m e-buses is ₹5.8 and ₹6.6 respectively, which is about one-third of Internal Combustion Engine (ICE) buses.
Government vs. Private Buses
India currently has ~23 Lakh buses, of which only1.4 Lakhare run by public transport authorities. E-buses currently represent a very small segment of India's overall EV market, largely driven by government initiatives.
China has about six buses for 1,000 people, India has only four for 10,000 people. Overall penetration needs to increase with more private
"The conversion of private buses to electric is an important step in India's decarbonisation efforts"
Saurabh Kumar
Vice president, the Global Energy Alliance for People and Planet (GEAPP) in India
The state economic survey, released recently, revealed that while every BEST bus covered an average of 183 km daily in 2015, the number fell to 169 km (a drop of 14 km) in 2018 and is dropping further.
E-buses make sense in the intra-city landscape but could be difficult to operate in the inter-city scenarios because of higher average distances i.e. roughly 400km+. Electric buses face hurdles for long-distance travel due to the need for frequent charging and insufficient charging infrastructure. But the flip side is that to get the cost advantage, one needs to run the buses over bigger distances. Hence, it can be an interesting problem to solve in the coming years.
An E-bus purchase by BEST cost at ₹1.61 crore, which is more than double the price of regular diesel buses (₹80 lakh). Clearly, an exponentially high capex call on the asset remains a big blocker. Source: Economic Times.
But the fact that India needs public transport since 20% of the families don’t any mode of transport (National Family Health Survey), making this space intriguing for the future.
EVs Around The Globe
Find the "why" of this:
China, the U.S., and the EU lead globally in EV sales & penetration.
The US and China are now on the mature end of the "S Curve," where growth has slowed. India, meanwhile, still has significant growth potential and can have a "J Curve" growth.
Southeast Asia is India's closest market comparison, with both regions seeing strong adoption of E2Ws.
Market Share: China, U.S., & Europe
In 2024, the global EV market was dominated by three key players: China led with approximately 61% of sales, Europe followed with around 21%, and the U.S. secured about 10% of the market share.
China went for the "bottom-up approach" and the U.S. went for the "top-down" approach. What's that?
The U.S. introduced EVs at higher price points, making them less accessible, China focused on affordable, mass-market options, driving widespread adoption.
India appears to be following a similar path. In CY 2023, around 94% of EV sales in the country were electric two-wheelers (E2Ws) and three-wheelers (E3Ws). The similarities between India and China as markets are striking, especially given their comparable demographic profiles.
Tesla played a pivotal role in shaping perceptions of EVs in the U.S. — the debut of the Roadster in 2008, priced at around $98,950, positioned EVs as luxury items rather than practical choices. The 2012 introduction of the Model S, starting at $60,890, moved towards affordability but still surpassed the average new car price of about $25,000 at the time.
In contrast, the Nissan Leaf, launched in 2010 for $32,780, offered a more pragmatic and cost-effective alternative to Tesla's offerings. Priced significantly lower than the Roadster and Model S, the Leaf signified a shift towards making EVs accessible to a broader market segment.
While Tesla initiated the conversation about EVs in the U.S., the landscape evolved with other automakers focusing on affordability and mass adoption.
However, when it comes to Chinese automakers like BYD entered the market with its cheapest EV at $10,000, significantly undercutting their Western counterparts.
This affordability contributed to EVs becoming mainstream in China, where they are now viewed as practical and commonplace vehicles rather than luxury items.
As technology advances and production scales up, the cost of EVs is steadily decreasing worldwide. This trend is making EVs more competitive with traditional internal combustion engine vehicles and helping shift their image from exclusive luxury items to accessible, everyday transportation options.
China: The undisputed global leader
China has solidified its position as the global leader in electric vehicles, surpassing other major markets. Chinese-made EVs are increasingly penetrating Europe, with forecasts suggesting they will capture a significant25% market share in 2024. In 2022, China accounted for half of the 850,000 electric passenger cars imported to Europe alone.
In 2023, China emerged as the world’s largest auto exporter, shipping over 4 million cars globally. Of these, 1.2 million were electric vehicles (EVs). The main destinations for these exports were Europe and the Asia-Pacific region.
What helped China’s success?
China's policy impact on EV penetration in passenger vehicles
But while China has dominated the global EV game, there’s an interesting trend taking place in the country.
China’s EV industry is transitioning from a period of unbridled growth to consolidation. EV sales grew 90% YoY in 2022, and 36% in 2023, and are projected to touch around 24% in 2024.(According to an article by Rest of World)
But, the Chinese market is commoditised and brutal:
To add fuel to the EV fire, there’s a bitter price war due to the ‘commodification’ of EVs in the Chinese market. The chassis, battery, and powertrain are available as an ‘Open Source’ to most companies. As a result, many brands came up, with little to no differentiation.
Like most commoditised products, a price war ensued. Now, brands are bleeding dry to be the cheapest brand to get a share of wallets. As a result, they’re cutting corners when it comes to manufacturing. And consumers are complaining about severe quality issues. By 2030 – only 19 of 137 of China's current EV car brands will be profitable, as per Bloomberg.
But, what about EVs as a share of passenger vehicles?
China's S-curve appears the most advanced, with a near-vertical rise and projected saturation by 2035. EU's S-curve follows a similar trajectory but with a slower initial rise. This reflects a slightly later adoption phase compared to China, but still experiencing significant growth due to ambitious environmental goals and government initiatives.
On the global stage, the S-curve shows a steady rise, aiming for a 70% EV market share by 2035. This indicates a broad shift towards electric vehicles, but it’s taking its time compared to China’s rapid ascent and the EU’s strong push.
Meanwhile, Japan and India are still catching their breath at the start of their EV journeys, showing a slower initial uptick in EV sales but with plenty of room to grow.
EVs as share of passenger vehicle sales
Yearly Change in EV Share (2022 - 2023))
Although India is a laggard, our EV sales grew from 0.4% to 1.5% in just one year from 2021 to 2022. That's about 3X faster than the global average, according to WRI.
India & China: No apple-to-apple comparison
While the Chinese market is often viewed as a leading indicator for forecasting trends in India due to similar market dynamics, this approach doesn't always hold true.
In China, low-speed scooters dominated the E2W market. Expecting this trend to come to India, Tarun Mehta, Co-founder and CEO of Ather Energy, saw an opportunity to innovate by developing lithium-ion battery packs, as most manufacturers were still using lead-acid batteries. But, the Indian market had different needs and preferences.
The sale of high-speed E2W in India is more than 65% of the overall E2W sales for the first half of the fiscal year 2023.
Another pivotal moment for China’s E2W market was the significant increase in agricultural wages from 1981 to 2020, especially accelerating after 2000. Between 2010 and 2020, these wages grew by 3.40 times, making $400 e-scooters accessible to lower-income populations. In contrast, India has yet to achieve similar economic alignment. The affordability of e-scooters (priced at ₹1.2 Lakh and more) for a broader segment of the population remains an unmet challenge.
Source: The above section is derived from the insights Tarun Mehta shared on the Backstage with Millionaires.
What’s happening with passenger vehicles in Southeast Asia?
Primed for Growth
Southeast Asia's electric vehicle (EV) market is experiencing a surge, with passenger EV sales exploding since 2015. This rapid growth is driven by a confluence of factors. Government incentives, like tax breaks and purchase subsidies, are making EVs more affordable for consumers, chipping away at the traditional dominance of gasoline-powered vehicles.
Furthermore, decreasing battery costs, a major factor in EV pricing, are bringing them closer to price parity with conventional cars. Finally, a growing environmental awareness is sweeping across the region, with consumers increasingly opting for EVs to reduce their carbon footprint and combat air pollution, a major concern in many Southeast Asian cities.
Indonesia’s strategic EV push
Indonesia, Southeast Asia's largest economy, is emerging as a key player in global electric vehicle (EV) production, aiming to produce 13 million electric motorcycles and 2.2 million electric cars by 2030. In fact, with 52% of the world’s nickel resources, Indonesia is vital to the global battery production supply chain. Transportation accounts for 40% of the nation’s total energy consumption, making EV production crucial for reducing emissions, lowering oil imports and subsidies, and cleaning up cities.
With roughly 115 million two-wheel vehicles (2Ws) — 7X the 16 million four-wheel vehicles (4Ws), and 70% of households owning combustion-based 2Ws, Indonesia faces challenges like fuel import dependency, fiscal burdens, and urban pollution.
Although their market is similar to ours, India’s market still has a unique design, filled with its fair share of challenges and opportunities.
“While global best practices offer insights, the Indian market's unique characteristics necessitate tailored solutions. Countries like Norway (Oslo), the UK (London), and Japan have made significant investments in charging infrastructure, which India can learn from, but adaptations are necessary for local context.”
Indian EV Policies
Find the "why" of this:
FAME is government's flagship scheme — so far there have been 2 editions and 3rd one is around the corner.
FAME has been lauded for demand creation but criticized for not focusing on holistic EV Ecosystem development.
A sizeable chunk of the PLI (product-linked incentive) – a scheme to boost the Indian manufacturing story – is towards the manufacturing of EVs and their components in the country.
No country can meet its electric vehicle (EV) targets without a unified policy effort. Although individual states have experimented with statewide policies since 2017, the primary national initiative, FAME has been in place since 2015.
FAME : Multiple phases, one goal.
FAME (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles) is India's government initiative to boost electric mobility. Launched in 2015, it offers financial incentives and infrastructure development to drive EV adoption.
The program has evolved through phases: FAME-I focused on market creation, FAME-II expanded to include infrastructure, and FAME-III (expected in August 2024) will feature a ₹10,000 crore budget to support electric two-wheelers, three-wheelers, and government buses.
FAME I (2015-2019)
Groundwork for India's EV story
The FAME-I scheme addressed core challenges like cost, technology, infrastructure, and awareness. Launched with a budget of ₹895 crore, it set the stage for future phases. Here's what FAME-I achieved:
Demand Incentives:
2.8 lakh EVs supported with ~₹360 crore.
Subsidies: Reduced upfront costs, making EVs more affordable.
Public Awareness: Campaigns to increase EV acceptance.
Charging Infrastructure:
520 charging stations sanctioned with a ₹43 crore budget.
Pilot Projects:
425 electric and hybrid buses deployed across cities with a ₹280 crore government incentive.
R&D Support:
₹158 crore invested in technology development, including setting up a 'Centre of Excellence' for research in electrified transportation and battery engineering, collaborating with institutions like ARAI, IIT Madras, IIT Kanpur, and others.
FAME II (2019- Mar'24)
Building on foundations of FAME-I.
Building on the success of FAME-I, FAME-II aimed to create a more sustainable EV ecosystem across India by focusing on electrifying public transport, expanding charging infrastructure, and promoting electric 2-wheelers and 3-wheelers. FAME-II launched with a ₹10,000 crore budget, aiming to support 7,000 e-buses, 5 lakh e-3 wheelers, 55,000 e-passenger cars, and 10 lakh e-2 wheelers. An additional ₹1,500 crore was later added to the scheme.
Subsidy to Manufacturers:
₹5,248 crore given to electric vehicle manufacturers, supporting the sale of ~11.6 Lakh EVs as of December 2023.
Electric Buses:
6,862 electric buses sanctioned for intracity operations, with 3,487 e-buses supplied to various State Transmission Utilities (STUs) by November 2023.
Capital Subsidy to OMCs:
₹800 crore capital subsidy granted to three Oil Marketing Companies (OMCs) under the Ministry of Petroleum and Natural Gas for the establishment of 7,432 EV public charging stations.
EV Charging Stations:
An additional 148 EV charging stations were sanctioned, further expanding India's charging infrastructure
How does FAME actually work?
Under FAME-II, consumers received an upfront discount on hybrid and electric vehicles at the time of purchase, reducing the price directly. This incentive is aimed at encouraging wider EV adoption. The government reimburses this discount to the OEMs (EV manufacturers) later.
Tata Motors was the biggest beneficiary of FAME II for making e-3 and e-4 wheelers.
According to sources, Tata Motors has sold around 2,200 electric buses and 15,000 e-PVs (for fleet services) under the scheme, for which it has got an average of ₹20,000 per kWh for each of the buses and ₹10,000 on average for the electric cars on a per kWh basis.
But, FAME- III when? FAME-II was supposed to end in March 2024 but the government extended it till July 2024. The government is now gearing up for FAME- III, which is expected to be rolled out soon with an outlay of ₹10,000 crores.
“The current FAME programs (1 & 2) have focused on upfront incentives but haven't addressed other crucial areas like charging infrastructure, financing, workforce training, and after-sales service. FAME 3 should take a more comprehensive approach to build a robust EV ecosystem.”
Some observations after subsidy changes:
Despite a gradual reduction in government subsidies, demand for EVs remains strong – strong evidence seen last year when the subsidies took a hit.
In FY24, India had ~16.8 Lakh EV sales, with the peak in month of May 2023 at ~1.6 Lakh units. In June – sales dipped by ~33% due to subsidy cuts.
But the demand rebounded in July despite this reduction.
This shows FAME has solved "product discovery" and "customer conversion" by highlighting the practical benefits of EVs over traditional ICE vehicles.
"We have had a policy framework where the tax on electric vehicles is just 5% as compared to 48% on hybrids which we intend to continue over a long period of time."
On November 11, 2020, India rolled out the Production Linked Incentive (PLI) Scheme with a whopping ₹1.46 Lakh Crore (~$19.5 billion) budget.
The idea? Supercharge domestic manufacturing and cut down on imports by offering financial perks to companies setting up shop in India.
Think of it this way: while FAME is all about driving EV demand and setting up charging stations, PLI is like a magnet pulling in both local and global players to build massive factories and keep production local.
Sectoral Allocation in PLI Scheme:
The PLI scheme priorities specific sectors for development, as visualised in the pie chart:
Breakup of total production linked incentive scheme to boost local manufacturing
1. Automotive and Auto Components Sector:
The biggest slice of the PLI pie, ₹57,042 crore (~$7.6 billion), is earmarked for this sector. The goal? Draw in global EV players and tech, cut down on imported EVs, and create local jobs in the EV space.
2. Advanced Battery Manufacturing:
With ₹18,100 crore (~$2.4 billion) dedicated, this investment aims to kickstart a robust domestic battery production base, essential for EVs and other electronics.
PLI scheme focus: Key sectors for India’s future
Goal: Strengthen the local EV industry
Also targets: Boosting other major manufacturing areas
Objectives:
Attract new investments
Create jobs
Cut down India’s trade deficit
Soon after launching, the government highlighted early wins from the PLI scheme in the Automobile and Auto Component Industry.
While the FAME policy has done well to spur consumer demand with incentives, there's a pressing need to enhance our charging infrastructure—this is crucial for supporting India’s EV transition.
Here are 5 key ministries shaping central-level EV policies:
Ministry of Heavy Industries (MHI): The MHI administers EV-related schemes such as FAME, PMP, PLI ACC, and PLI for Automobiles and Auto Components.
Ministry of Power (MoP): The MoP facilitates the installation of EV charging infrastructure and addresses related issues, including defining Green Open Access Rules.
Ministry of Housing and Urban Affairs (MoHUA): The MoHUA has amended the Model Building Byelaws 2016 and the URDPFI Guidelines 2014 to include provisions for EV charging.
Ministry of Finance (MoF): The MoF makes decisions on GST rates, Income Tax under CBDT, and Customs Duty on EVs and related components.
Ministry of Environment, Forest and Climate Change: This Ministry notifies rules such as E-Waste (Management) Rules 2022, Battery Waste Management Rules 2022, and Hazardous Waste Management Rules 2016 pertaining to EVs.
While it’s not always explicitly stated, the Ministry of Heavy Industries is the main body overseeing EV policies and communications for the Government of India. But it’s important to note here that not all parts of India have embraced the EV wave equally.
Top 3 Geographies
Find the "why" of this:
UP, Maharashtra, and Karnataka are leading in EV consumption.
UP tops the list for E3Ws, while Maharashtra leads in E2Ws.
For EV investments, Maharashtra, Karnataka, and Tamil Nadu are at the forefront.
India’s EV story revolves around three key states: UP, Maharashtra, and Karnataka together account for 39.51% of India’s total EV Sales from Jan-March 2024.
Total EV sales in leading Indian states for Q4 FY24
Total EV sales in leading Indian states for Q4 FY24
Uttar Pradesh leads the nation in E3W sales, outpacing every other state.
EV Penetration in leading Indian States (Q4 FY24))
Interestingly, Tata Motors has around 1,500 dealerships in India, but only 250 of them sell EVs. Of these EV dealerships, Maharashtra, Karnataka, and Uttar Pradesh make up just ~25% of total dealerships but a whopping ~70% of the total EV dealerships. (Source: Bain’s India EV Report)
Leaders of the Charge
"The state government has decided to continue offering incentives for electric and strong hybrid vehicles, given their current penetration is a mere 1.5%. The government believes that these incentives are crucial to encouraging customers to shift away from conventional petrol and diesel vehicles"
Penetration across Top 5 states in different segments in FY 2024
1. Uttar Pradesh
Uttar Pradesh leads the pack with the highest EV registrations in India. In FY24, the state saw 3 Lakh+ EV sales, making up 17.4% of the country's total.
In FY24, EVs represented about 9% of all vehicle sales in Uttar Pradesh, a 3X increase from the previous year.
The state's E3W passenger vehicles penetration has skyrocketed to around 84%, driven by the surge in demand for last-mile mobility solutions. Here's why Uttar Pradesh stands out:
A. Subsidies Disbursed under FAME-II
Uttar Pradesh has been one of the top beneficiaries of the FAME II scheme, receiving over ₹395 crores in subsidies as of May 2024. This accounts for about 6% of the total nationwide FAME-II funds, making EVs more affordable for buyers in the state.
B. Charging Infrastructure Landscape
Public Charging Stations: Uttar Pradesh has 583 public charging stations as of May 2024, making up 3.57% of the national total. However, it still lags behind some other states.
Charging Type: Despite this, the state leads in EV sales due to the widespread use of E3Ws, which can be charged using simpler 3-pin or 16A plugs. The high demand for last-mile and intra-city small goods and mobility solutions drives E3W adoption.
C. Investments in Uttar Pradesh
Manufacturing Hub: Uttar Pradesh is a major center for E3W production. This growing manufacturing base positions Uttar Pradesh as a leader in the EV revolution. This local production not only boosts the economy but also makes E3Ws readily available for purchase.
Key manufacturers include Mini Metro, Hotage Corporation, J.S. Auto, and Gayatri Electric Vehicle, with several facilities across the state.
CLN Energy: Battery manufacturing plant in Noida.
Mini Metro, Hotage Corporation, J.S. Auto, and Gayatri Electric Vehicle: Factories in Meerut, Kanpur, and Noida.
Ashok Leyland: New plant dedicated to electric buses, with an initial capacity of 2,500 buses per year.
D. Policy
Uttar Pradesh was also one of the first states to come up with a state-level EV policy. Much of their success in the EV sector could be attributed to their strategic implementation of the UP Electric Vehicle Manufacturing and Mobility Policy in 2022.
100% Tax Waiver: For EVs sold and registered from October 14, 2022, to October 13, 2025.
Rebate: In the fourth and fifth years (October 14, 2025, to October 13, 2027), a 100% rebate on EVs manufactured, sold, and registered in the state.
Purchase Subsidies: Incentives for various EV segments including two-wheelers, four-wheelers, e-buses, and e-goods carriers.
2. Maharashtra
Maharashtra is a major player in India's EV revolution, having the second-highest EV sales with over 2,12,352 electric vehicles sold in FY2024, accounting for ~12% of the country’s total. In the state, E2Ws lead the market with a substantial ~87% share, followed by E4Ws at ~6%, E3Ws at ~7%, and E-Buses at 0.30%.
While, overall E3W penetration stands at 7%, penetration of E3W commercial vehicles accounts for 31.63%.
Let's explore the factors behind this success:
A. Subsidies disbursed under FAME II
Maharashtra has received over ₹1,148 crores in subsidies as of May 2024, accounting for an impressive 17.75% of the total FAME-II funds distributed across India.
B. Charging infrastructure landscape
The state also leads in the number of public charging stations, with over 3,083 stations—about 19% of the national total. Pune and Mumbai are key players, hosting more than 75% of these stations. Pune's strategic location on major highways makes it a prime spot for charging stations, catering to long-distance EV travel.
I’ve seen a huge rise in the number of EV charging stations in the Mumbai-Pune expressway in the past three years. The range anxiety is still there, I’m not going to lie, but I’m much more relaxed even if I leave either of the cities on low charge.
Lokesh Sambhwani
Founder, Refillable
C. Manufacturing in Maharashtra
Maharashtra is a magnet for EV manufacturing. Major players like PMI Electromobility, Gensol EV, Bajaj Auto, Piaggio, and Mahindra have all set up production facilities in the state. These investments not only create jobs but also ensure a steady supply for consumers. Companies like CLN Energy, ARENQ, Battrixx, and Exide have further strengthened the ecosystem by establishing battery manufacturing plants in Maharashtra.
In July 2024, Ather announced that it will be opening its first manufacturing plant outside of Tamil Nadu, near Maharashtra’s Aurangabad.
D. Policy
Maharashtra is among the top 5 Indian states with the most comprehensive EV policy designs, according to a study by Climate Trends titled ‘Analysis of State Electric Vehicle Policies and Their Impact’. Maharashtra is also among the top 9 states with the strongest demand-side incentives.
Additionally, back in July 2021, Maharashtra rolled out a comprehensive EV policy, in a bid to accelerate the adoption of EVs:
Key aspects of the policy include:
Market Share: Aim to achieve 10% EV market share of new vehicle registrations by 2025.
Public Transport Electrification: Target 25% electrification of public transport and last-mile delivery vehicles in major cities by 2025.
Charging Infrastructure: Develop charging stations in a grid pattern and along highways.
Demand Incentives: Provide incentives for electric two-wheelers, three-wheelers, and four-wheelers.
Tax Exemptions: Exempt EVs from road tax and registration fees.
Manufacturer Incentives: Offer incentives for buyback schemes and extended battery warranties.
Charging Stations: Incentives for setting up public and semi-public charging stations.
3. Karnataka
Karnataka emerged as the third-largest contributor to India's EV sales in FY2024, with sales accounting for 9.66% (1,69,826 units) of the national total EV sales. Much like Maharashtra, in Karnataka, E2Ws dominate 88.19% market share, with E-Cars following at 7.82%, trailed by E3Ws at 3.40%, and E-Buses at 0.35%. However, when it comes to penetration, E3W commercial vehicles take the win with a 27.41% penetration. Let’s dig into the factors that lead to this:
A. Subsidies disbursed under FAME II
As of May 2024, Karnataka secured over ₹1,002 crores from the FAME-II budget. This represents roughly 15% of the total subsidies distributed nationwide.
B. Charging Infrastructure Landscape
Karnataka boasts 1,041 operational public charging stations (PCS) as of May 2024, representing 8% of the national total. This extensive network supports the state’s high sales of electric two-wheelers and cars, creating a favourable environment for EV adoption.
C. Investments in Karnataka
Karnataka is not just a leader in EV sales and charging infrastructure, it's also a hub for innovation and manufacturing in the electric mobility sector. Here's a look at some key players:
Mahindra Electric (Nov 2018): Invested ₹100 crore to establish a technology hub focused on producing electric vehicle powertrain components like battery packs, power electronics, and motor assemblies.
Altigreen (November 2022): Set up a manufacturing plant and warehouse in Malur with an annual capacity of 55,000 electric three-wheelers (E3Ws) and an investment of ₹80 crore.
E2W powerhouses: The state is home to leading electric two-wheeler (E2W) manufacturers like Ola Electric, Ultraviolette, and Ather Energy.
Battery Power: Log9 Materials operates a battery manufacturing plant with a capacity of 50 MWh in Bangalore.
Manufacturing muscle: River began production of electric vehicles from its Hoskote plant in August 2023, with an annual capacity of 100,000 units.
Beyond manufacturing: Karnataka fosters innovation with the presence of EV charging companies like Exponent Energy and Bolt.Earth, alongside battery swapping specialist Sun Mobility.
D. Policy
Karnataka offers a range of incentives to boost the adoption of electric vehicles (EVs) and support the EV manufacturing ecosystem:
Vehicle Scrapping Incentive: Tax concession ranging from ₹1,000 to ₹40,000 for those scrapping end-of-life vehicles and purchasing new electric ones.
Charging Station Subsidy: 25% capital subsidy on charging equipment, up to ₹5,00,000 per station.
Manufacturing Subsidy: Various incentives for EV manufacturing enterprises, including:
Stamp duty exemption
Land conversion fee reimbursement
Subsidy for setting up effluent treatment plants (ETP)
Concessional registration charges
Interest-free loans for large-scale enterprises
Separate incentives for EV cell and battery manufacturers
Electricity tariff: 100% exemption from duty/tax on electricity tariff for the first 5 years.
To emphasize the importance of policy in EV adoption, let's take the example of Telangana, where EVs make up ~0.4% of the 1.6 crore vehicles, with 60% of them in Greater Hyderabad.
Why?
Because, unlike states like Gujarat, Maharashtra, & Delhi, which offered EV purchase subsidies – Telangana only provided road tax and registration fee exemptions.
Experts blame the lack of state incentives, battery safety concerns, and a shortage of charging stations for this slow growth. This highlights the need for targeted incentives to boost EV adoption.
These 3 states, along with Tamil Nadu, Kerala, and Gujarat are the shining beacons of EVs in India. In a sense, there’s a sort of flywheel that gets created for the Top 5 states: increased EV consumption boosts investment, leading to higher production capacity, which in turn drives even more consumption. Now, let’s get a picture of the entire EV market.
EV Value Chain
Find the "why" of this:
China may not hold the largest reserves of lithium, nickel, or cobalt, but it dominates the processing and refining of these crucial elements needed for lithium-ion batteries.
Although alternatives like lead-acid, sodium, and solid-state batteries exist, lithium-ion remains the gold standard in battery technology.
Gujarat and Tamil Nadu, though not in the top 3 for EV sales, have emerged as key hubs for the intricate EV manufacturing process in India.
Significant investment is committed to commercializing the technologies related to EV manufacturing. In 2020, an investment of $275b was estimated for building EV manufacturing infrastructure globally. But within two years, in 2022, this projection for 2030 was increased by 20% to $345b. (As per EY)
Components Breakdown
Electric vehicle (EV) manufacturing, while sharing similarities with traditional car production, has some distinct processes tailored to electric drivetrains and their unique requirements:
Component Breakdown of an EV
Electric Motors:
EVs typically use Permanent Magnet Synchronous Motors (PMSMs)
These motors are efficient, powerful, and compact
Their small size allows for better placement in the car, improving weight distribution and handling
This results in quick acceleration and longer travel distances on a single charge
We’ve been fortunate to partner with Sedemac from the early days and saw demand inflect for motors/controls from ICE to EV. BMS and power trains also have specialised requirements, unique to EVs. Novel cell chemistries and form factors for the Indian climate can become a large market, especially with growing Indian OEMs becoming cognisant of this requirement for their products.
Pratik Poddar
Partner, Nexus Venture Partners
One key area we find intriguing is EV motor technology. The materials used (magnets, metals), power efficiency, and heat's impact on motor longevity are crucial challenges to scaling EV adoption beyond metro areas. The predictable lifecycle and ownership costs of EVs, often overlooked, need innovative solutions from entrepreneurs.
Dinesh Pai
Business and Investments, Zerodha and Rainmatter
Power Electronics A.K.A The Brain Center:
Act as a conversion system between DC (from batteries) and AC (for motors)
Use inverters to transform DC to AC
Employ pulse width modulation (PWM) to optimize power delivery
Enable regenerative braking, which captures energy during deceleration and stores it back in the battery
Materials:
Lightweight materials like aluminium and carbon fibre composites are used in body construction
This helps offset the weight of the battery pack without compromising safety
Thermal management systems use materials with high thermal conductivity
These systems may include liquid cooling or strategically placed heat sinks to maintain optimal battery temperature
Software:
Controls the electric motor for smooth power delivery and efficient energy use
Battery Management System (BMS) monitors battery health, temperature, and prevents issues like overcharging
Integrates various vehicle control systems like traction control and driver assistance features
Ensures overall safe and efficient operation of the EV
“There is a reason why Tesla is called a software company and not a hardware company. Because the strength of an EV comes from the digital monitor and manage it, unless you you are able to do it, you won’t be able to drive the best efficiency out of battery or the EV vehicles"
Akshay Singhal
CEO, Log9 Materials
Charging Infrastructure:
Home charging options often include Level 2 chargers for faster charging than standard outlets
Public charging stations are crucial for widespread EV adoption
Manufacturers may partner with charging station companies or advocate for expanded networks
EBITDA Margins in Value Chain
Key Challenges in EV Manufacturing
A rapid increase in raw material costs owing to the COVID-19 pandemic, the war in Ukraine, and the high demand for EVs have forced many OEMs to increase prices. Direct material costs for an EV are up by 144% from $3,180 in March 2020 to $8,255 per vehicle as of May 2022.
While EV manufacturers are revving their engines, they face some roadblocks on the path to widespread adoption, and here’s a closer look at the challenges they come across:
1. Supply Chain Complexity:
The concentration of critical mineral reserves and mining operations worldwide raises significant concerns regarding supply availability, price volatility, and geopolitical instability. Key minerals such as lithium, nickel, cobalt, and graphite are essential for manufacturing lithium-ion batteries crucial for electric vehicles and renewable energy storage.
Not only are global reserves of battery raw materials concentrated in a few geographies, but their processing is also largely monopolised by China.
China controls over 60% of global lithium production through joint ventures in Australia and South America. It also holds a dominant position in processing critical minerals, with nearly 66% of global lithium processing capacity, 75% of cobalt, 95% of manganese, and almost all graphite.
This results in a blended processing capacity of around 84%. Major investments include a lithium hydroxide plant in Kwinana and a significant copper and cobalt venture in the Democratic Republic of Congo.
By dominating the global supply chain for these critical minerals, China wields significant control over battery production and pricing.
China's manufacturing dominance is fading globally, positioning India to capitalise on this shift. India's manufacturing prowess and 'China+1' strategy would play to India's biggest advantage, benefiting the overall value chain.
Kunal Gupta
CEO, EMotorad
2. Battery Technology:
India aims for 30% of all vehicles to be electric by 2035 and plans to generate over 500 gigawatts of renewable power. Meeting these goals will require about 500 gigawatt-hours of batteries by 2030 to ease the transition to EVs.
Currently, lithium-ion batteries power for nearly all-electric vehicles globally, constitute about 40% of the vehicle's cost. EVs typically offer a range of 110 to 480 kilometres per charge and require 4 to 8 hours for a full charge. The dominance of lithium highlights a need for battery technology advancements to enhance economics, range, and charging speed, despite lithium's advantages of lightweight and high energy release.
The market size for the lithium battery is predicted to grow from $57billion in 2023, to $187 billion by 2032.
While sodium-ion batteries benefit from the natural abundance of sodium, leading to much lower extraction costs, their lower energy density impacts the range of EVs. Sodium batteries currently offer around 5,000 charging cycles, compared to lithium-iron phosphate batteries, which can handle between 8,000 to 10,000 cycles. Solid-state batteries are another alternative, but scaling them up remains a challenge, as advancing the technology relies on finding durable solid electrolytes—something researchers are still striving to achieve.
However, Colorado-based Solid Power has developed a sulfide electrolyte-based battery claims to offer 50-100% higher energy density than modern lithium-ion batteries.
State-wise Battery R&D Policy
3. Infrastructure Gap:
The transition to electric vehicles (EVs) hinges not just on the technology itself, but also on the supporting infrastructure:
Limited Public Charging Stations: "Range anxiety," – the fear of running out of power before reaching a charging station is a significant barrier to EV adoption. The current lack of a widespread and reliable public charging network discourages many consumers from making the switch.
As of June 2024, 16,348 public charging stations for 41,35,077 EVs sold since 2015. This means the EV-per-charger ratio is 252 in the country.
According to the International Energy Association (IEA), the ideal EV-per-charger ratio is 10 EVs for each charging connection.
Uneven Distribution: Existing charging stations may be concentrated in urban areas, leaving rural and remote locations underserved. This creates a disparity and hinders the practicality of EVs for long-distance travel or those without access to home charging.
Almost 25% of all public charging stations in the country are in Maharashtra, that too mostly in Pune and Mumbai.
Standardisation Issues: Inconsistent charging standards and connector types can create confusion and inconvenience for EV owners. A lack of universal standards across different manufacturers and countries can make it difficult to find compatible charging stations while travelling.
4. Cost Challenge:
“Reducing the number of middlemen in the value chain is important for reducing the end cost. This is the only way China has been able to reduce the cost. If you look at a CATL, they own everything from mining all materials to manufacturing cells and working with OEMs to set up factories. BYD has everything under the sun from mining to cars”
Akshay Singhal
CEO, Log9 Materials
Manufacturing EVs is currently more expensive primarily because of high battery and component costs. To make electric vehicles (EVs) more appealing to consumers and expedite the transition to electric mobility, manufacturers must innovate to reduce production expenses while maintaining quality and performance.
Bold tariff tricks by the USA:
USA 4Xd the tariff on EVs made in China from 25% to 100% and increased tariff from 7.5% to 25% for Chinese lithium-ion batteries. USA wants to save itself from China eating the US market as many European companies and Tesla are manufacturing in China.
India's tax incentives to push EV manufacturing:
India is stepping on the gas pedal to become a major electric vehicle (EV) producer. The government has unveiled a new scheme offering tax relief to attract foreign investment and set up local manufacturing. This initiative is seen as a way to lure big names like Tesla.
Key features of the scheme:
Tax cuts for big investments: Companies investing over $500 million and setting up factories within three years will get reduced import taxes on certain EVs.
No cap on investment: There's no limit on how much EV manufacturers can invest, encouraging them to bring advanced technology to India's Atmanirbhar Bharat initiative.
Temporary tax benefit: For five years, a lower customs duty of 15% (70% before) will apply to imported EVs (worth at least $35,000) – but only if the company builds a factory in India within three years. The tax benefit has a cap based on investment or another government program (PLI scheme).
Import limits with investment targets: Companies can import a maximum of 40,000 EVs over five years, with a yearly limit of 8,000. If they invest more than $800 million, the import limit can be higher.
Local manufacturing push: Companies must build factories and start EV production in India within three years. They also need to gradually increase local parts usage, reaching 25% within three years and 50% within five years.
This scheme aims to make India a hub for EV manufacturing, attracting foreign investment and technology while boosting domestic production.
As a result of this:
Tesla is planning to invest up to $3 billion in setting up manufacturing plants in India. They are finalising negotiations for its first manufacturing plant in India, in Gujarat.
BYD also proposed to set up a $1 billion plant in India, though their plant was rejected. Many speculate that the reason for this is the tension between India and China
When asked, Shoffr founder, Vikas Bardia, if they import their BYD fleets, he says
We don’t import; all cars are available for purchase in India. Of course, things should improve further in terms of pricing and choices once BYD begins manufacturing cars locally.
Vikas Bardia
Founder, Shoffr
Vietnam's VinFast has commenced construction for establishing a new integrated EV manufacturing unit in Tamil Nadu where the company has planned to invest ₹4000 crore, spread over 5 years.
Tesla’s Entry in India
As of Apr 2024, Tesla is gearing up to enter the Indian market, and they might not be coming at the Indian EV sector alone. Here's the breakdown:
Potential Partner: Talks are underway between Tesla and Reliance Industries (RIL) for a possible joint venture. This wouldn't necessarily mean RIL is entering the car business itself, but rather focusing on building India's electric vehicle (EV) manufacturing capabilities.
RIL's Role: Details are still being ironed out, but RIL is expected to play a key role in setting up Tesla's manufacturing facility and its supporting ecosystem in India.
Which Indian state will become the EV manufacturing hub?
While there are a few contenders, two states that particularly stand out to become the manufacturing hub in India are Tamil Nadu and Gujarat.
Tamil Nadu
As of August 2023, Tamil Nadu leads India in electric vehicle production, making up 46% of the country's two-wheelers.
The state plans to build a robust EV ecosystem, targeting over $6billion in investments and generating around 150,000 jobs in the near future.
Tamil Nadu, often referred to as the “Detroit of India”, is aggressively positioning itself as a premier global destination for EV investments. Hyundai, Foxxcon, Ola, Ashok Leyland, and TVS Motor have committed significant investments, supported by proactive initiatives led by Minister of State of Industries, Dr. T R B Rajaa.
In an interview with Autocar India, Minister Rajaa outlined his strategy, emphasizing a "plug and play" approach to facilitate rapid setup for investors.
Tamil Nadu, already the largest producer of electric two-wheelers in India, boasts Hyundai Motor India's substantial Rs 20,000 crore investment in EVs.
Ola Electric is launched the world's largest gigafactory in Krishnagiri, set to reach 100 GWh capacity, underlining Tamil Nadu's pivotal role in global EV manufacturing.
The state's focus extends beyond vehicle manufacturing to encompass battery and semiconductor chip production. Rajaa highlighted Tamil Nadu's readiness to offer Production Linked Incentives (PLIs) and other incentives, supported by expansive land banks and a robust emphasis on skill development.
Gujarat
Gujarat has emerged as a central hub for electric vehicle (EV) manufacturing, attracting substantial investments and expansions from major carmakers.
The Gujarat government is proactively working to attract investors for electric vehicle manufacturing by encouraging research and development.
MG Motors has commenced production of its new EV at its Halol plant and announced plans for a second facility with a ₹5,000 crore investment.
Maruti Suzuki, India's largest car manufacturer, is set to roll out its first electric vehicle from its Gujarat plant this year.
Tata Motors has also activated its newly acquired plant in Sanand for the production of the Nexon EV.
The growth of Gujarat's EV ecosystem extends beyond vehicle manufacturing.
Companies such as Torrent Power, Adani Total Energies E-Mobility, and Reliance Jio BP have deployed charging infrastructure statewide.
Investments in battery technology have soared in Gujarat. Suzuki Motor Corporation plans to construct a plant for manufacturing battery electric vehicle (BEV) batteries, while
Tata Group has partnered with the state government to establish an EV battery plant in Sanand.
Smaller ventures like WardWizard Innovations and Mobility have also established assembly lines for local battery pack production.
The EV ecosystem in Gujarat isn't confined to four-wheelers alone. Electric two-wheeler manufacturers like:
Triton EV India Private Limited and Odysse Electric Vehicles have made substantial investments in the state. Triton EV has developed a pilot facility in Kheda and acquired AMW Motors Manufacturing facility of 3.7 mn square feet in Bhuj, Gujarat.
In conclusion, both Gujarat and Tamil Nadu are making significant strides in establishing themselves as leaders in India's burgeoning electric vehicle sector, each leveraging unique strengths to attract investments and foster comprehensive ecosystems for sustainable growth.
Ather Energy plans to invest ₹2,000 crore to establish a third manufacturing plant in Maharashtra. Currently, the company operates two facilities in Hosur, Tamil Nadu: one focused on battery production and the other on vehicle assembly.
"With our growing product range and rising consumer demand for our scooters, we've chosen to expand our production capabilities to a new location. This new facility will bring us closer to key markets, helping to reduce logistics costs and accelerate the delivery of finished products to our customers."
India currently imports 70% of its lithium-ion batteries from China, primarily assembling cells into battery packs locally.
As of June 2024, the country's charger-to-EV ratio stands at 1:252, far below the ideal 1:10 ratio needed for smooth operations. However exact infrastructure count remains a mystery.
Battery-as-a-service (BAAS) model startups like Battery Smart, Sun Mobility and Yuma are gaining traction, cutting down upfront EV ownership costs.
Companies like Log9 are setting an example for commercially manufacturing India first lihtium ion cells.
Companies like Bolt.Earth & Statiq are bringing innovative approaches to solve for different charging needs of India.
BluSmart is a unqiue ride-hailing startup company solving for infrastructure while it expands its fleet.
Battery
Sourcing of Raw Materials
Overall, a battery electric car uses about six times more minerals than an ICE car. This is because electric vehicles have large batteries packed with lithium, nickel, cobalt, etc. for energy storage, while gasoline cars rely on simpler engines that mainly use copper for wiring. This difference translates to a higher upfront cost for electric cars initially.
Minerals Used EV cs ICE
The dependency of electric vehicles (EVs) on minerals introduces significant bottlenecks in the supply chain due to their concentration in specific geographical regions.
For example, the Democratic Republic of Congo (DRC) holds an overwhelming 64% of the world's cobalt reserves, while Australia accounts for nearly half of global lithium production.
This concentration poses a precarious situation. Geopolitical instability, trade disputes, or environmental challenges in these regions can lead to severe disruptions in the global supply chain for EV minerals.
Country-wise Reserves (Lithium & Nickel)
Country-wise Reserves (Cobalt & Graphite)
Manufacturing Capacity
China holds 85% to 95% of the production capacity for each of the major components of batteries, as well as about 70% of global lithium refining capacity, according to Bloomberg NEF.
Despite China not being blessed with the minerals required to manufacture lithium-ion batteries, they have the highest manufacturing capacity. They almost have a monopoly in this area.
In 2022, lithium nickel manganese cobalt oxide (NMC) remained the dominant battery chemistry with a market share of 60%, followed by lithium iron phosphate (LFP) with a share of just under 30%, and nickel cobalt aluminium oxide (NCA) with a share of about 8%.
Battery Cell Production
A total of 70% of battery cell production is dominated by three companies—CATL in China, LG Energy Solution in Korea, and Panasonic in Japan.
What about Lithium found in J&K?
India's first lithium reserves were discovered in Jammu and Kashmir (J&K) in February 2023.
Estimated reserves stand at 5.9 million metric tonnes, making India the 7th largest source of lithium globally.
To confirm the reserves and move to the final stage of exploration, detailed geochemical and geophysical surveys and drilling are required. This discovery is only in the 2nd stage of mineral exploration (G3 survey)
India currently "lacks" the necessary refining infrastructure and also technology to move extracted lithium to next level of the supply chain and this could take years to develop.
The lack of advanced exploration technology and a need for diversification of import partners may push India to collaborate with Argentina (part of the Lithium Triangle) to leverage their experience in lithium utilisation.
India’s cell-making state
As of 2023, approximately 70% of the total consumption of Li-ion cells is imported from China and Hong Kong. In India, we only assemble these cells in battery packs.
In FY 2023, India spent about ₹34,800 crore on importing four important minerals: lithium (excluding lithium-ion), cobalt, nickel, and copper. India relies heavily on these minerals, with dependence ranging from 93%+.
While, there are signs of change with more vertical integration by vehicle manufacturers and battery makers coming in, the fundamental issue that comes into the picture is the cost.
“Oben Electric has consistently embraced an in-house designing, developing, and manufacturing of vehicles and the critical EV components . We believe in continuous innovation for better quality of product and a sustainable business. With in-house R&D at the core, we manufacture our own LFP batteries, electric motors, chargers, and vehicle control unit.”
Madhumita Agrawal
Founder & ceo, Oben Electric
India’s Li-ion battery imports increased from $384.6 mn in 2018–19 to $2.8 billion
"We didn’t import the technology; we developed it ourselves. With the 4680 Bharat Battery Cells, we can reduce the cost of EVs by 25-30%"
Apart from Ola, companies like Reliance Industries and Rajesh Exports are also beneficiaries of PLI for making cells in-house.
Log 9 is India’s first company to make a lithium-ion manufacturing facility. The company has set an example for its in-house innovation approach. At the moment the capacity is not humongous (50MWh) but they are laying the foundations of India’s cell-making future.
From MNCs like Reliance Industries, Tata Group, and Suzuki to the legacy battery businesses such as Amara Raja, and Exide, and new entrants like Godi, and Nsure — several companies are trying to enter India's cell manufacturing space with heavy investments. But the cell-making space is a capex-heavy business that requires deep investment in the deep-tech.
That’s why Log9 has advanced to a model where the company isn’t a supplier for the battery pack but a partner for OEMs, helping them with data sourced via battery usage and also helping OEMs set up charging networks where necessary with their partners.
“Our clients are fleet operators, people who are using EVs for commercial purposes are our clients. We are just not a supplier for vehicle manufacturers, we are partners of vehicle manufacturers to serve the fleet operators”
Akshay Singhal
CEO, Log9 Materials
Battery Chemistries
1. Lead Acid
Lead-acid batteries, while the first rechargeable battery ever invented, are most commonly used only in E3W.
According to industry estimates, approximately 70% of electric three-wheelers (E3W) are powered by lead-acid batteries rather than lithium-ion batteries.Source
Compared to lithium-ion batteries, lead-acid batteries:
Have lower energy density compared to lithium-ion batteries.
Are significantly heavier.
Take longer to recharge.
Have a shorter lifespan.
But, they are still used in E3W instead of lithium-ion batteries because:
They are significantly cheaper.
On average, drivers spend ₹450 per day on compressed natural gas (CNG), the primary fuel for three-wheelers. In contrast, electric vehicle drivers spend ₹200 daily, as estimated by the industry.
Lead-acid batteries have simpler charging requirements. They can often be charged with standard outlets.
One interesting trend here is that the broader industry is optimistic about E3W moving to lithium-ion batteries.
The decreasing costs of lithium-ion batteries are a significant tailwind, driving increased usage in the electric three-wheeler (E3W) market. Over the past decade, the cost of Li-ion batteries has dropped by about 30% annually.
Out of the ₹10,000 crore budget for FAME-II, ₹987 crores have been specifically allocated for E3W battery subsidies.
In addition, advanced Battery Management Systems (BMS) enhance safety, while the integration of CAN Communication Technology offers valuable real-time information that users find extremely useful.
2. Lithium-ion
Lithium-ion (Li-ion) batteries are rechargeable energy storage devices that have become ubiquitous in electric vehicles (EVs).
Advantages:
High energy density, providing more power per unit weight and volume.
Long cycle life, allowing for many charge-discharge cycles over their lifetime.
Moderate weight compared to other battery technologies, enhancing portability and usability.
Disadvantages:
Sensitivity to extreme temperatures, necessitates a Battery Management System (BMS) for safe operation.
Risk of thermal runaway under certain conditions, which can lead to uncontrolled temperature increases and potential safety hazards.
However, within the Li-ion family, different sub-types exhibit distinct characteristics that influence their suitability for various electric vehicle (EV) applications. Here's a breakdown of two major contenders: Lithium Iron Phosphate (LFP) and Nickel Manganese Cobalt (NMC).
2.a. Lithium Iron Phosphate (LFP)
Lithium Iron Phosphate (LFP) batteries shine with top-notch safety, high-temperature stability, and enduring cycle longevity, perfect for reliability-focused applications. Though slightly less dense than NMC variants, they excel where robustness matters most.
Advantages:
Safety and Stability: LFP batteries excel in safety, resisting thermal runaway even under high temperatures.
Long Cycle Life: Capable of enduring numerous charge-discharge cycles without significant capacity loss.
Reliability: Ideal for safety-critical applications prioritizing longevity over maximum energy density.
Disadvantages:
Lower Energy Density: Offers slightly less energy density compared to NMC batteries, resulting in shorter driving ranges per charge.
Potential Weight Issue: Tends to be heavier than NMC batteries, potentially impacting efficiency in weight-sensitive applications.
2.b. NMC batteries
NMC batteries offer a balance of high energy density and improved stability compared to earlier lithium-ion chemistries, making them suitable for demanding applications like electric vehicles and grid storage.
Advanta:
High Energy Density: Provides greater energy density than LFP batteries, enabling longer driving ranges in electric vehicles.
Extended Range Capability: Ideal for EVs requiring extensive range capabilities, such as long-distance passenger cars.
Disadvantages:
Chemical Stability Concerns: Less stable chemistry compared to LFP, leading to higher risks of thermal runaway, especially at high temperatures.
Shorter Cycle Life: Typically degrades faster over charge-discharge cycles compared to LFP batteries.
Higher Cost: More expensive due to cobalt dependency, a mineral with limited global supply and price volatility.
The expected maximum value capture of Lithium Iron Phosphate (LFP) batteries is significantly higher than that of Nickel Manganese Cobalt (NMC) batteries.
LFP batteries are considered superior, why?
LFP batteries can exceed 3,000 charge cycles and potentially reach 6,000 with proper use and maintenance, whereas NMC batteries typically offer between 1,000 to 2,000 charge cycles.
LFP batteries have a lower self-discharge rate of around 3% per month, while NMC batteries degrade faster at approximately 4% per month.
3. Sodium Ion
Sodium-ion batteries offer a promising alternative to lithium-ion due to cost and safety advantages. They are cheaper to produce using abundant sodium, making them viable for EVs and energy storage. They are safer and can withstand higher temperatures, suitable for hot climates. Despite lower energy density than lithium-ion batteries, ongoing development aims to improve this technology, reducing dependency on lithium supplies dominated by China.
4. Solid State
Solid-state batteries represent the future of EV technology, using solid electrolytes instead of liquid, offering potential for greater energy density and safer operation. They promise longer driving ranges, faster charging times comparable to gas refueling, and eliminate flammability risks associated with liquid electrolytes. Companies like Toyota and Volkswagen are investing heavily, aiming for commercial EVs with solid-state batteries by 2030, though challenges remain in their early-stage development.
“A major white-space within the EV industry is developments in the field of battery technology. This entails developing batteries with newer technologies such as high-capacity, fast-charging, and solid-state batteries, and also working on battery recycling and repurposing solutions.”
Tushar Garg
co-Founder & CEO, BLUMSART CHARGE
Battery Degradation
All rechargeable batteries, including those in electric vehicles (EVs), degrade over time. This means their capacity to store energy gradually reduces, resulting in a shorter driving range on a single charge for an EV.
Several factors can contribute to battery degradation:
Charge Cycles: The more frequently a battery is charged and discharged (completed cycles), the faster it degrades.
Depth of Discharge (DoD): Regularly draining the battery to a very low level can accelerate degradation.
Extreme Temperatures: Both high and low ambient temperatures can stress the battery and reduce its lifespan.
Fast Charging: While convenient, frequent fast charging can put additional strain on the battery and contribute to faster degradation.
But, Tesla in its 2022 impact report mentioned that even after 200,000 miles (321,000 kms) of distance traveled, its battery backs retained more than 80% of their health. But remember, Tesla uses the most advanced battery packs in its cars (gold standard).
Research by GTRI states, that a typical lithium-ion battery’s life is 6-7 years; after which it needs to be recycled.
However, it's important to note that Tesla's battery packs are among the most advanced in the industry.
Tesla's Battery Tech Superiority
Charging Infrastructure
There is a significant disparity in the number of operational EV charging stations across different states in India.
Almost 25% of all public charging stations in the country are in Maharashtra, and most of them are in Pune and Mumbai. Some states, like Delhi (1886) and Maharashtra (3070), have a considerably higher number of stations compared to others.
As venture capital investors focused on climate tech and EVs, we prioritize the critical yet often overlooked middleware of the EV ecosystem. While EV manufacturers receive the spotlight, we invest in the companies developing advanced batteries, power electronics, charging infrastructure, and innovative materials.
These technologies are essential for faster charging, longer battery life, and efficient energy use, driving the scalability of EVs globally. Supporting these behind-the-scenes innovators is key to building the foundation for a truly electrified world.
Rishi Raj Choudhury
Gruhas
As of June 2024, 16,347, public charging stations for ~41,35,077 EVs sold since 2015. This means EV-per-charger ratio is 252 in the country. According to the International Energy Association (IEA), the ideal EV-per-charger ratio is 10 for each charging connection.
State-wise Charging Station Breakup
“Charging infrastructure is also a sector with a lot of potential for the entry of solutions that provide ultra-fast charging, plug and charge, wireless and mobile charging technologies. There is also a need for the integration of renewable energy sources and development of peer-to-peer (P2P) charging networks.”
Tushar Garg
co-Founder & CEO, BLUMSART CHARGE
Challenges with charging infrastructure:
According to Park+ survey, 51% of electric vehicle owners in India considered switching back to ICE vehicles due to charging anxiety, high maintenance costs, and low resale values.
“The U.S. charging model won't work in India, where two-wheelers, three-wheelers, and public transport dominate, unlike the U.S., which is car-centric and more spread out. if you look at Asia, you'll mostly see dependence on two-wheelers, three-wheelers and public transport”
Mohit Yadav
Founder, Bolt.Earth
1. High Installation Costs
The high cost of installing EV charging stations, especially fast-charging DC stations, poses a significant barrier to widespread electric vehicle adoption.
These stations require expensive hardware due to their rapid power delivery capabilities, necessitating advanced technology.
Grid upgrades often accompany installations, involving costly enhancements like transformer upgrades and new power lines.
Moreover, navigating complex permitting processes and requiring skilled labor for installation and maintenance add to the upfront investment, hindering rapid deployment of charging infrastructure.
“Charging remains to be a problem even now. It will not go away immediately. It is only with some demand for chargers will the supply of them take off as well. Most people now use home-based chargers. The cold start problem doesn’t not exist anymore –– components, vehicles & financing are available and evolving.”
Venkatesh Modi
Blume Ventures
2. Lack of Standardization:
India's lack of finalised EV charging standards, overseen by the Ministry of Power and Niti Aayog, has led to widespread incompatibility issues. Vehicle manufacturers and charging infrastructure companies operate without a unified standard, resulting in significant investments in chargers that often go unused due to mismatched standards.
For example, many first generation public chargers follow the Chinese GB/T standard (Bharat DC-001), despite vehicles predominantly using the European CCS2 system. This chaotic situation led to many stations being defunct and leaving customers confused.
To share a parallel from the world of consumer tech, the fact that Apple used a ‘lightning’ cable instead of the standard Type C caused an uproar in the EU, so much so that the tech giant was forced to bring in the Type C, worldwide, in their latest iPhone.
3. Grid Stability Concerns:
A 2019 report by Brookings India indicates that even with 100% electric vehicle (EV) sales by 2030, India's power grid may experience a manageable increase in electricity demand, estimated at around 100 terawatt-hours (TWh), representing a modest rise of 1.3% to 4.8%.
However, challenges persist.
EVs' high charging capacities can cause sudden spikes in electricity demand, posing challenges for grid stability. Short but intense power surges during charging initiation require smart grid strategies in India to manage peak demands effectively and ensure stable power supply for charging infrastructure.
“Energy management systems offer immense opportunities, particularly in areas like advanced energy storage, platforms for energy optimization, smart grid integration, and Vehicle-to-Grid (V2G) technologies."
Tushar Garg
co-Founder & CEO, BLUMSART CHARGE
Nearly 39 out of 100 charging stations installed in Lutyens' Delhi over a year and a half ago are no longer functional, with 21 others awaiting repairs or yet to be commissioned.
The issues to various external factors. Public chargers, often installed without security in locations provided by municipal bodies, are vulnerable to tampering, screen damage, and gun damage by vandals. Kapoor notes that unmanned stations at night are especially prone to mishandling, with numerous incidents of gun theft reported.
Most electric vehicle (EV) drivers, including those with all-electric vehicles and plug-in hybrid electric vehicles (PHEVs), usually charge their vehicles overnight at home using either AC Level 1 or AC Level 2 chargers. Level 1 chargers, typically found at home, are the slowest, while Level 2 chargers are also common at public stations and workplaces. DC fast chargers, capable of significantly charging a vehicle in 30 minutes to 1 hour, are primarily used for quick charging needs.
Table: Levels of Electric Charging
Level 1 Charging uses a standard 3-pin plug for slow, overnight charging at 1-3 kW.
Level 2 Charging employs AC wall box chargers with 3-22 kW power ratings for faster, several-hour charging. Both options can be used at home depending on your needs.
Level 3 Charging, or DC fast charging, is the highest level with power ratings over 50 kW (up to 350 kW). In India, DCFC stations like Tata Power's 25 kW offer quick top-ups along highways for long journeys.
We aim for an extremely dense network. For 95% of users, charging speed is less critical, given that the average daily city travel is just 20-30 km. That’s why Bolt.Earth has built 80% of its network with L1s so far.
Mohit Yadav
CO-FOUNDER, BOLT.EARTH
Your vehicle's onboard charger capability is crucial:
NexonEV Prime has a 3 kW onboard charger, making a wall box charger redundant.
NexonEV Max, with a 7 kW onboard charger, benefits from a wall box charger if needed.
Note:
An EV onboard charger is a device that helps charge an electric vehicle's battery by converting power from a wall outlet (AC) into the type of power the battery needs (DC) while making sure the voltage is just right.
DCFC stands for Direct Current Fast Charging stations. These are high-powered charging stations that can quickly charge an electric vehicle (EV) by supplying direct current (DC) power directly to the battery. Unlike regular chargers that convert AC power from the grid to DC power within the vehicle, DCFC stations provide DC power directly, allowing for much faster charging times.
Value Ecosystem for EV charging points
The below image illustrates how an EV owner, interacts with a complex network of players and processes involved in EV charging infrastructure.
e-Mobility Service Providers (e-MSPs): Manage access to charging stations.
Charge Point Operators (CPOs): Handle installation and maintenance of charging points.
Setup: Involves acquiring charging equipment and establishing Electric Vehicle Supply Equipment (EVSE).
Infrastructure Needs: Requires adequate electricity supply and land.
Software Solutions: Manage charging sessions, payments, and overall user experience.
Ideal Loop of circularity
Market leaders:
1. Tata Power EZ Charge
Tata Power EZ Charge, part of the Tata Group, has taken a leading role in India's EV charging scene. With the strength of its existing power grid, Tata Power has rolled out a wide network of charging stations across the country. They offer everything from public charging stations to home and fleet solutions, covering the needs of all kinds of EV users.
EZ Charge has expanded its network to include over 86,000 home chargers, 5,300 public, semi-public, and fleet charging points, and more than 850 bus charging stations, spanning 530 cities and towns across India.
2. Bolt.Earth
Bolt.Earth is making a name for itself by bringing smart, scalable end-to-end charging solutions to the table, including Level 1, Level 2, and Level 3 hardware for two, three, and four-wheelers. Bolt.Earth's focus on building a dense universal charging network backed by innovation and flexibility is helping to shape the future of EV charging in India. The company has a unique peer-to-peer model, inspired by India's PCO phone booths.
Anyone can buy a small charging station for roughly ₹6,000, be part of the network, and charge a price to earn passive income (this also works for Level-2 and Level 3 HW).
Bolt.Earth is building the Airbnb for EV charging where they are also enabling the asset. Their network has grown to over 35,000 locations across India, including many in rural areas.
Clients of Bolt.Earth include big OEMs, RWAs, and corporate parks for charging infrastructure and software, working across the EV charging value chain to enable a comprehensive solution.
About 80% of the Bolt.Earth's network is built up with L1 charging points, the remaining 20% is split between L2 and L3
Statiq, a newer player in the game, has made a big splash by focusing on building a dense network of public charging stations. Their push for affordability and accessibility is all about making EVs easier and cheaper for people across India.
Company does it all – makes EV electrical chargers (AC/DC hardware), makes the software for the mobile application, and then we also create their own network. An end-to-end EV charging solution stack company. Statiq's network now covers over 7,000 chargers across 65 cities, with bold plans to expand to 20,000 chargers by 2025.
4. BluSmart
Players like BluSmart who buy their fleets from incumbent players like Tata Motors also take help for charging points. BluSmart has signed a substantial multi-year Power Purchase Agreement (PPA) with Tata Power. The agreement aims to procure green power for BluSmart's operations, contributing to the decarbonisation of mobility.
As part of the agreement, BluSmart will secure 30 MW of capacity from Tata Power's 200 MW Solar PV power plant located in the Bikaner district of Rajasthan.
“A Power Purchase Agreement (PPA) is a long-term agreement between a power producer (like Tata Power) and a buyer (like BluSmart) to purchase electricity. It specifies the source for this energy (solar energy from Tata Power’s solar plant for BluSmart), amount of power to be supplied, and also locks in the price of electricity to ensure cost predictability over the duration of the contract period.
The power producer supplies electricity generated by them to the buyer (through the grid or directly to their facilities) and may also provide the buyer with Renewable Energy Certificates (RECs).”
Tushar Garg
co-Founder & CEO, BLUMSART CHARGE
Batteries as a Service:
The high upfront cost of electric vehicles (EVs) is particularly due to the battery pack and has been a significant barrier to their widespread adoption in India. Battery as a Service (BaaS) emerges as a potential game changer, addressing this challenge and offering a more accessible path to EV ownership. Also, the global BaaS market is projected to reach $5.30 billion by 2030, up from $1.37 billion in 2023.
The EV revolution is growing exponentially in India, we’re already at 3M vehicles and expect it to be north of 10M in the next 6 years. We’re investors in Battery Pool, which are building a solid BaaS swapping network in India. We're seeing innovative solutions take root across the country, from smart charging networks to battery-swapping stations, ensuring the ecosystem is ready to meet the demand. Investing in EV infrastructure is a no-brainer and we will see solutions across the country.
Hershel Mehta
General Partner and Co-founder, 2am VC
With Battery-as-a-Service (BaaS), customers can reduce upfront costs by 40-50%, as they no longer need to make the one-time payment for the entire battery pack.
For example: Battery Smart (a BaaS startup) boosts rickshaw drivers' income by replacing lead-acid batteries with Li-Ion swapping, cutting downtime from 8 hours to 5 minutes, and increasing daily earnings by Rs ₹400-800 (1.5X to 2X).
How BaaS Works:
Separate Battery Purchase: Under BaaS, customers purchase the EV without the battery, significantly reducing the initial vehicle cost.
Subscription Model: The battery is then provided through a monthly subscription plan, similar to a cell phone plan. This subscription fee covers battery maintenance, replacement when needed, and potentially even charging costs.
“With 2.7 million E-Rickshaws on the road, there's a $1 billion ARR opportunity in battery swapping and energy services. These rickshaws mostly use lead-acid batteries, which fail in 9 months and cost ₹35,000-₹40,000 to replace.
This presents a prime opportunity for retrofitting and introducing a subscription model to keep vehicles running 24/7. Since charging takes 5-6 hours, there's also room for micro-entrepreneurs to step in and provide specialized services, as no single player can handle it all.”
Battery Smart caters to two- and three-wheelers, which are the backbone of last-mile delivery and public transport in India. It serves 60K+ customers with 1,200 stations across 35+ cities in India. It leverages local businesses like garages and shops instead of creating new infrastructure, hitting 45 million+ total swaps and 100k daily swaps so far.
With no need for heavy capital investment in infrastructure, the company can open 3-4 new swap stations every day. Battery Smart’s partners only pay a licensing fee to operate stations, while the company takes care of all investments in batteries and chargers. A great mix of smart scaling and supporting the micro-entrepreneurs. It also allows the company to keep costs low while scaling up rapidly, especially in underserved Tier 1, 2, and 3 cities, where charging infrastructure is limited.
As India targets net zero emissions by 2070, advancements in electric vehicle technology are essential. The rising demand for cost and time-effective alternatives makes battery swapping a key solution in the EV market. At Battery Smart, we facilitate the transition to electric mobility by cutting upfront ownership costs by 40% and tackling range anxiety and long charging times. This holistic approach not only saves time and enables longer trips but also boosts incomes, empowering consumers and reinforcing India’s commitment to sustainability.
Pulkit Khurana
Co-founder, Battery Smart
2. Yuma Energy
Yuma Energy, a prominent Battery-as-a-Service (BaaS) company formed through a partnership between Yulu and Magna, celebrated its first anniversary by achieving a milestone of completing 10 million lifetime battery swaps.
Yuma's swapping network supports 8 lakh swaps monthly averaging 15 swaps per minute, enhancing operational efficiency and user convenience. Operating in Bengaluru, Mumbai, Navi Mumbai, Delhi-NCR, and Gurugram, Yuma has facilitated over 250 million kilometres of eco-friendly rides in 2023.
3. Gogoro : The Taiwan monopoly
Gogoro's battery-swapping network boasts over 1.1 million smart batteries and a network of 12,000 stations across Taiwan. This translates to over 400,000 daily swaps, keeping riders on the move with minimal downtime. In Taiwan, Gogoro has over 600,000 active riders.
The extremely high penetration is a result of them owning 90% market share in Taiwan's E2W market, avoiding inter operability issues.
Now entering the Indian market, Gogoro aims to replicate this success by offering a comprehensive solution with locally-made electric scooters and a growing swapping infrastructure. It will be interesting to see how it turns out for them in India, as the markets are completely different.
Zypp, a leading EV-as-a-Service platform, will utilize Gogoro's proven battery-swapping network for their electric delivery scooters. This pilot program launched in Delhi in December 2022 and aims to demonstrate the efficiency of swapping for logistics companies.
Gogoro partnered with Hindustan Petroleum Corporation Limited (HPCL), a major state-owned oil and gas company in India. The details of this partnership haven't been publicly disclosed, but it's expected to involve the rollout of Gogoro's battery-swapping stations at HPCL retail outlets across India.
“India is in the early stages of a massive electric transformation of its urban two-wheel transportation system and it is increasingly evident that battery swapping is a critical component to broad adoption, so building out the swapping infrastructure is crucial. Today, we are announcing a partnership with HPCL, one of India’s leading oil companies, to rollout thousands of Gogoro battery swapping stations across its retail outlets throughout the country in the coming years”
This recent partnership focuses on Swiggy, India's leading on-demand convenience delivery platform. Swiggy delivery riders will gain access to Gogoro's electric scooters and swapping network. This partnership aims to transition Swiggy's hyperlocal delivery fleet to electric vehicles, improving efficiency and sustainability for both companies.
4. Sun Mobility
Sun Mobility is an Indian electric vehicle energy services company founded in 2017. Their core focus lies in developing, manufacturing, and operating battery-swapping infrastructure for electric two-wheelers, three-wheelers, and even larger commercial vehicles. The company does roughly 1 million monthly swaps.
Their joint venture with Indian Oil leverages their 37,000+ gas stations to create a vast swapping network by 2030. Their partnership with Tata Power-DDL supports Delhi's "Switch Delhi" campaign, promoting affordable electric two- and three-wheelers.
Benefits of BaaS for Indian Consumers:
Lower Upfront Cost: BaaS makes EVs more affordable by eliminating the high upfront battery cost. This can be particularly attractive for budget-conscious consumers who might be hesitant about the initial investment in a traditional EV purchase.
Reduced Risk: BaaS mitigates concerns about battery degradation and replacement costs. The responsibility for battery maintenance and replacement falls on the service provider, offering peace of mind to the user.
Potential for Innovation: The BaaS model incentivises battery technology advancements. Service providers have a vested interest in developing longer-lasting and more efficient batteries to reduce replacement costs.
Fast public charging (DC) with increasing use cases in logistics is a space we’re keeping an eye on. On the swapping front, there is tremendous scope for Pan India applications across last mile mobility for e3Ws → more efficient than slow charging/at-home charging/maximises vehicle uptime and $ for the driver. Brand creation is imperative here.
The Indian government recognises the potential of BaaS and has expressed support for its development through a battery swapping Policy. Last April, NITI Aayog unveiled the draft EV battery-swapping policy to enhance the efficiency of electric two- and three-wheelers through a robust battery-swapping ecosystem. Along with a subsidy scheme for battery providers and potentially reducing the GST tax rate for batteries, the draft aimed to establish standards in the battery sector and promote interoperability.
However, it is currently being revised because of industry concerns over proposed mandates for battery interoperability, sources familiar with the matter told Inc42.
Pulkit Khurana, co-founder of Battery Smart (a battery swapping start-up), highlighted the challenges related to interoperability, citing the ongoing evolution of batteries, connectors, and battery chemistry as complicating factors in standardising the battery swapping process.
We equip all batteries on our network with IoT devices for real-time monitoring of key parameters like voltage, temperature, and current. We also provide 24/7 support for our drivers and partners. Additionally, all station partners and drivers undergo mandatory training on battery management, storage, handling, and emergency response.
Pulkit Khurana
Co-founder, Battery Smart
Arguments against BaaS:
User inconvenience:
For individual users, especially 2-wheeler riders, the idea of physically swapping out a heavy battery is inconvenient and less appealing. Convenience is a major factor in user experience, and if the swapping process requires effort and physical exertion, it could deter potential users from adopting this model.
Scaling challenges for OEMs:
Even large automakers like BYD and Tesla have scaled back their battery swapping initiatives after trials. This suggests that the model may not be scalable or economically feasible, even for bigger players in the market. Ather Energy in India also initially started with battery swapping, but eventually moved away from it, indicating that the model may not be as practical as anticipated, especially for end-users.
Safety & interoperability concerns:
The lack of standardisation across different swapping networks, such as Sun Mobility and Battery Smart, leads to interoperability issues. Users may find it frustrating if they cannot swap batteries between different networks, reducing the overall convenience.
Safety concerns, particularly around swapping stations being located in petrol pumps, may also deter users. The fear of batteries exploding or catching fire adds to the general unease about the technology, especially when housed in proximity to flammable fuels
Also here's one hot take by Akshay Singhal (Founder, Log9) on battery swapping.
“Every big company like Nio, Tesla, and BYD tried battery swapping and scaled back”.
“Swapping requires more number of batteries per number of vehicles on the road. And, manufacturing batteries is the most carbon-intensive part of the value chain. So if you have more batteries per vehicle, you are defeating the first purpose of going electric by piling up more emissions”
Akshay Singhal
CO-FOUNDER, LOG 9 MATERIALS
Cost Of Ownership
Find the "why" of this:
TCO or total cost of ownership gives a net estimate on owning and using an asset in long-run.
EVs to be economical have to be run enough to give customer a tangible benefit.
E2W and E3W showcase a better TCO when compared with ICE (internal combustion engine) alternatives.
E4W make TCO sense when used commmerically only.
E-buses need extended range to fully unlock TCO benefits.
When considering EV ownership, the sticker price isn't the whole story. Total Cost of Ownership (TCO) takes a more comprehensive view, factoring in all the expenses you'll incur throughout your ownership period.
Key elements of vehicle TCO include:
Purchase Price: Initial cost to acquire the EV.
Operating Costs: Regular expenses like electricity (charging), maintenance, and insurance.
Depreciation: Decrease in value over time impacting resale potential.
Tax Incentives: Potential savings from governmental incentives.
Charging Infrastructure: Installation or subscription fees for home or public charging stations.
Maintenance and Repairs: Costs for servicing, parts replacement, and unexpected repairs.
Insurance Premiums: Coverage expenses specific to electric vehicles.
Fuel Savings: Savings compared to traditional gasoline or diesel vehicles.
One major barrier to EV adoption in India's price-sensitive automobile market has been the higher initial purchase cost. However, advancements in battery and power component technologies, along with economies of scale, are gradually reducing EV prices.
“For an EV to be cost-effective and to create a positive impact, it has to be run enough, and that kind of utilization is just not there is personal/private use case"
E2W and E3W sales constituted approximately 94% of total EV sales in the country. In contrast, the adoption of EVs in other vehicle segments may have been slower due to ongoing economic viability challenges in their electrification as we will see in the next paragraphs
2. E4W is economical for commercial operations
TCO analysis indicates that electric cars are ready for integration into commercial fleets with high daily mileage. However, for personal use, financial incentives are still needed.
The B2B section of the report further validates this point as we observe ride-hailing platforms like Uber, Ola, and BluSmart turn to EVs.
3. E-buses require substantial daily range to achieve economic feasibility
The electrification of public transport bus fleets is crucial for making sustainable long-term investment decisions. However, based on a standard daily range of 200 km, electric buses currently exhibit a lower TCO per kilometre compared to diesel buses.
To enhance the economic competitiveness of electrified public transport fleets, electric buses need either higher daily mileage or financial incentives to offset initial capital costs.
If you want, you can play around with the TCO of ICE vs EV using the below calculators:
Uncertainty about residual value, credit-worthiness of blue-collar workforce and books of new EV startups make lenders cautious
Major banks like SBI, HDFC, and Axis Bank now offer specialised EV loan products.
Some lenders are offering lower interest rates for EVs, typically 0.25% to 0.5% lower than for internal combustion engine (ICE) vehicles.
Commercial EV financing is limited, but companies like Greaves are partnering with NBFCs to bridge the gap.
Traditional automakers like Tata, Mahindra, and Hyundai leverage dealer networks to sell EVs.
New players like Ather and Ola are opening experience centers, with multi-brand hubs like BikeWo, Electric One emerging.
Direct-to-consumer models are gaining traction, especially for electric two-wheelers.
Automotive Skill Development Council (ASDC) and OEMs are launching training programs to address the skill gap for EV technicians.
Mobile service units are being deployed by some companies to provide at-home maintenance.
Financing options for electric vehicles (EVs) are currently limited and often come with unfavourable terms. Compared to internal combustion engine (ICE) vehicles, access to funding is restricted, with fewer banks and non-banking financial companies (NBFCs) offering loans for EVs.
“While EV financing offers advantages, challenges remain due to the lack of an established used EV market, leading to higher interest rates. The uncertainty surrounding battery technology also makes it risky for banks and NBFCs to finance EVs. A financier who is capable of underwriting the tech of an EV can reap benefits. Most modern fintech lenders of EV have a battery tech division which focuses on this component.”
Venkatesh Modi
Blume Ventures
Those that do provide financing impose higher initial down payments due to lower Loan-to-Value (LTV) ratios of 10% to 30%. Interest rates are 1-9% higher, and loan tenures are 6-18 months shorter than those for ICE vehicles, leading to increased Equated Monthly Instalments (EMIs).
Additionally, high-usage applications face the extra cost of battery replacement every 4-5 years.
In India, where about 50% of 2-wheelers, 90% of 3-wheelers, and 80-90% of 4-wheelers are financed, the growing EV market presents a significant opportunity. The EV financing sector in India is poised for substantial growth, with projections indicating it could expand to ₹55,000 crore.
Current EV financing landscape
1. Personal
In the personal segment, EV financing is divided into two categories: 2-wheelers (2Ws) and 4-wheelers (4Ws). Customers in this segment typically have strong credit profiles, including stable income from salaried positions or business ownership, and a solid net monthly income after tax. As a result, financiers primarily focus on assessing the risk associated with the asset itself when issuing loans.
Personal use-case | Financing gaps for EVs identified in 2W but not in 4W
2. Commercial
In the commercial sector, which includes 2-wheelers (2Ws), 3-wheelers (3Ws), and 4-wheelers (4Ws), vehicle financing is primarily based on the earnings generated by the vehicle. This means that the creditworthiness of customers is closely linked to the vehicle's utilization and the overall viability of their business, adding complexity to credit risk assessment. Additionally, commercial vehicles are used more intensively than personal vehicles, raising concerns about asset risk.
a. E2W
Electric 2-wheelers (2Ws) are primarily used by e-commerce companies for food and parcel delivery. They are typically acquired by startups or aggregators rather than individual buyers. Thus, evaluating the creditworthiness of the firm and the viability of its business model is crucial for assessing credit risk.
b. E3W
For electric 3-wheelers particularly, which are purchased by both individual drivers and fleet operators in passenger and cargo segments, the customer profile often includes low-income groups. As a result, individual creditworthiness plays a crucial role in evaluating credit risk and loan eligibility.
c. E4W
Electric 4-wheelers (4Ws) are primarily used in two commercial applications: corporate fleets and passenger services (e.g., OLA, Uber, BluSmart). Loan eligibility and terms are based on the cash flow profiles of these businesses.
In B2B lending for fleet-owning startups, many are new and lack strong balance sheets, making it challenging to secure high loan amounts.
"We have good financing options but it took us some time to get here. Ultimately, financiers don’t care if you can be 100x - they underwrite a company’s intent and ability to pay back the principal and interest. Having transparent relations and a track record of healthy cashflows will help one unlock good financing options as well.”
Vikas Bardia
Founder, Shoffr
Commercial use-case | Financing gaps for EVs identified across all segments
LTV (Loan-to-Value) is a ratio that shows the loan amount a lender offers compared to a vehicle’s value. A lower LTV, like 70%, means the lender finances 70% of the vehicle's cost, while the buyer covers the remaining 30% as a down payment. Lower LTV reduces the lender's risk, providing a cushion if the vehicle’s value depreciates significantly, helping them recover losses in case of default.
Customer Pain Points and Financier Challenges
“Since the entire EV ecosystem is still in nascent stages, there are many opportunities. Primary ones lie in EV focused underwriting (i.e. financing/leasing and insurance), fleet operations, and charging infra. And there are so many related secondary ones like battery recycling, EV maintenance, data/telematics, etc.”
Vikas Bardia
Founder, Shoffr
What are some solutions to ease B2B EV financing?
1. A Diverse Ecosystem:
Unlike traditional car financing, which is often dominated by a few major players, B2B EV financing features a diverse ecosystem with both established lenders and innovative startups like Ohm Mobility. Ohm Mobility connects EV fleet owners with financial institutions, providing tailored financing packages. For example, a food delivery startup can receive customised loan terms and lower interest rates through Ohm Mobility, facilitating fleet expansion and accelerating growth.
2. Harnessing Technology:
Technology is central to B2B EV financing, enabling lenders to:
Utilize Digital Underwriting: AI-driven risk assessment tools analyse large data sets quickly, expediting loan approvals and reducing processing times.
Implement IoT-enabled Recovery: Telemetry systems in EVs facilitate remote tracking and immobilisation if needed, similar to models used by companies like Bounce and Yulu for rental fleets. The advanced connectivity of EVs enhances asset recovery efficiency.
Enhance the Customer Journey: Fintech solutions streamline the loan process with online applications and automated claim handling, improving borrower convenience.
3. Beyond Conventional Models:
B2B EV financing introduces new trends beyond traditional loans, such as:
Subscription Models: Businesses can opt for subscription-based financing, paying a fixed monthly fee for fleet usage. This model removes upfront capital costs and aligns expenses with vehicle usage.
Battery-as-a-Service (BaaS): Financing packages can include battery leasing or replacement services, addressing concerns about battery life and residual value—key barriers to EV adoption for businesses.
What’s up with the dealership space?
Distribution by legacy players like TVS, Bajaj, Tata etc. is not a concern because they already are sitting on a scale of thousands of customer touch points. Interesting new EV are going for experience centres. But, there’s an interesting business opportunity here. An opportunity of Multi brand outlets (MBOs).
As consumer demand grows, these dealerships provide customers with a wider selection of EVs from various manufacturers, addressing the limited availability of individual brands. Collaborative efforts between manufacturers, dealers, and service providers streamline the supply chain, offering a unified customer experience.
MBOs have been pretty successful outside India too. Multi-brand outlets like Nextmove in Germany, MisterGreen in the Netherlands, Carvana in the U.S., and Zhiche Auto in China have successfully expanded EV access by offering diverse models.
In India, companies like , Electric One and others are emerging players going for this model.
It has been difficult for dealers to push EV products because there is a lot of knowledge that needs to be transferred to the customers about EVs and only then a decision can be made. Additionally, the price of EVs (mostly) and the financing costs are much higher for EVs than for ICEs. hence from that perspective, a dealer faces additional challenges.
Lastly, people are always concerned about charging and this is something that the dealer cannot really control. Hence it becomes difficult for them to close leads if they are not empowered well.
How is the service like?
For users, dealing with unique spare parts, software glitches, and system blackouts can make the upgrade process frustrating and slow. Unlike traditional vehicles, you can’t visit a nearby mechanic; instead, you have to schedule with authorised dealers who don’t earn much from servicing. This opens up an opportunity to build a robust after-sales service network that covers multiple brands, vehicles, and specifications.
Select OEMs like Ampere have partnered with players like ReadyAssist to provide round-the-clock after-sales vehicle assistance. However, the scalability of this model is unproven.
Several short-term EV skilling courses have been launched in recent years by government bodies, like the Automotive Skills Development Council (ASDC), as well as industry bodies like German development agency Deutsche Gesellschaft für Internationale Zusammenarbeit India.
Companies like EV Masterclass offer courses certified by ASDC and other bodies to train individuals in the EV ecosystem. EV Masterclass has tied up with some OEMs like Kinetic Green and Sun Mobility to hire certified technicians and train them on-ground.
One of the biggest shortages of manpower in the auto industry currently is for individuals who understand the basics of auto electricals & electronics. While lack of awareness is one part of it, another barrier to drawing people in for skilling and upskilling is that the job role isn’t aspirational.
What about second-hand market?
As the space matures, we’ll also see a rise in the second-hand market for 4W Electric Vehicles. The main concern will be with battery packs — no one wants to buy a battery that is already in the sunset phase of its lifecycle.
In a recent survey conducted by Park+, it was found that 51% of EV car owners want to go back to petrol vehicles. The top reasons? Range anxiety, high repair costs, and low resale value. Source: HT Auto
Either incumbents like Cars24 and Spinny can have an AppleCare+-like service built on top of them, or a third-party vendor like Acko Insurance can come in and provide seamless replacement of batteries at a price lesser than the price of buying a purchase of a second-hand car. OEMs like Tata and Ola are already providing extended warranty services.
Avyens, a leading car leasing player, says that the situation is ripe for EVs to lead the way from ownership to usership i.e. leasing cars on a monthly basis rather than owning it fully. However, in a country like India where owning a car is not just a financial but an emotional decision, it remains to be seen if we can warm to the idea of leasing a car be it EV or ICE.
In parallel, availability of EV-specific spare parts is improving but remains a challenge in smaller cities and rural areas. Some manufacturers are adopting modular designs to simplify repairs and reduce spare part inventory requirements.
The Climate Question
Find the "why" of this:
The Battery Waste Management Rules, 2022, set India's first major guidelines for battery recycling.
In country, only seven companies, including Exigo, BatX, Attero, Rubiman, and Lohum, have ultra-refining facilities.
Batteries lose capacity after 8 years, but recycling can extend their lifespan by 5-10 years.
Recycling techniques such as pyro-metallurgy and hydro-metallurgy recover up to 90% of metals, including 99% pure lithium.
As India's EV market grows, battery recycling offers significant potential for sustainable growth.
NITI Aayog predicts India's battery recycling market will expand to 128 GWh by 2030, driven largely by EVs, a significant increase from 2 GWh in 2023. Recycling can reduce carbon emissions from battery production by up to 90%. In 2019, 100,000 tonnes of lithium-ion batteries were recycled globally, out of 180,000 tonnes produced. The push to recycle EV batteries is critical for reducing environmental impact and recovering valuable materials.
Fun fact: One tonne of Li-ion battery waste is equivalent to 1 e-bus battery; 3 EV car batteries; 29 three-wheeler batteries; 40 two-wheeler batteries; or 22,000 mobile phone batteries, as per Vikrant Singh (Founder, BatX Energies)
Manufacturing of an EV leads to double the emissions than an equal fuel vehicle. Whenever we talk about EVs, we don’t factor in what emissions have happened in mining, manufacturing, and putting together a vehicle. The Tata Nexon EV will achieve "absolute parity" with its petrol variant after covering 1 lakh kilometers
Akshay Singhal
CO-FOUNDER, LOG 9 MATERIALS
The need to recycle EV batteries, along with others, is multifaceted:
1. Environmental Impact:
Used batteries contain metals like lithium, nickel, cobalt, graphite, manganese, and copper, which can contaminate soil and groundwater if disposed of in landfills. This poses significant environmental risks.
2. Insulating Against Supply Issues:
India relies heavily on imports for lithium and cobalt, crucial components in rechargeable batteries. Most of the world's lithium comes from Chile, while the Democratic Republic of Congo dominates cobalt production. Recycling these minerals from used batteries can reduce dependency on imports.
Ideal loop of circularity
3. Optimizing Second Life Applications:
Rather than discarding EV batteries, which lose about 2.3% of their charge-holding capacity annually and are typically 85-90% effective after 5-8 years. It makes a lot of sense to repurpose them for energy storage.
Widespread Responsibility: Everyone involved in the battery's lifecycle, from production to disposal, has a role to play.
Ambitious Recycling Goals: The vision is to achieve a high recycling rate, with a target of recovering 70% of battery materials by 2027. This translates to a phase approach with aims to recover 55% by 2024–25, followed by 60% by 2026 and onwards.
Boosting Recycled Material Use: Producers are expected to gradually increase the percentage of recycled content, starting with 5% by 2027-28, and reaching 20% by 2030-31. This incentivizes the development of a strong recycling industry.
Extended Producer Responsibility (EPR): Battery producers (including importers) are financially responsible for ensuring their batteries are collected, recycled, or refurbished.
Lots of vehicles coming to the end of life/ government push here. Many players innovating recycling processes to maximise the yield of end metals. Ability to cross-penetrate into areas like e-waste, which can create large independent companies.
Pratik Poddar
Partner, Nexus Venture Partners
Challenges in Battery Recycling:
Setting up a lithium-ion battery recycling plant is much more expensive compared to traditional lead-acid battery recycling plants. Here's a breakdown of the cost challenges:
High upfront investment: Building a lithium-ion battery recycling facility with an 18,000 metric tonne annual capacity can cost anywhere from ₹ 220 crore to ₹ 370 crore. This is a staggering contrast to lead-acid battery plants of the same capacity, which only cost around ₹4 crore. Every batch of processed black mass and extracted salts needs to be sampled, which is expensive. So are the other parts, which include testing, grading, and crushing each cell.
Higher operating costs: Running a lithium-ion battery recycling plant is roughly 17 times more expensive than operating a lead-acid battery plant.
Transportation adds up: The cost of transporting used lithium-ion batteries to the recycling facility can increase the overall purchase cost by 35-50%. Battery scrap has to transported in special containers meant for dangerous goods and in a special vessel, making the freight cost roughly 2X the cost of normal freight.
Costly sampling equipment: Throughout the recycling process, samples from each batch of processed materials (black mass and extracted salts) need to be taken for analysis. The equipment required for this sampling is expensive.
Slow capacity utilization payback: It takes time for these recycling plants to reach full capacity, making it challenging to recoup the high initial investment quickly.
“E-waste recycling is going to be much larger than the entire plastic waste recycling or textile recycling in our country. That’s because textiles or plastic are low-value items, but batteries have great margins once their lifetime is extended.”
Lokesh Sambhavani
FOUNDER, REFILLABLE
Major Players in EV Battery Recycling
LiB recycling Capacity (in TPA: Tons/Annum) of Major Players
1. Attero Recycling:
Attero leads in Li-ion battery recycling in India. It partners with nearly 90% of Indian automobile OEMs, including MG Motors, Hyundai, Tata Motors, LG, Whirlpool, and Godrej. At present, the company has the capacity to recycle up to 1,44,000 metric tonnes of electronic waste (e-waste) and 15,000 metric tonnes of lithium-ion batteries annually. By 2025, Attero targets 250,000 metric tonnes and aims for 1 million metric tonnes by 2030, with plans for five new plants in India in the next three years.
As per the company, the industry average for extraction efficiency is 75%, whereas it has 98%. It's capex requirement for extraction is around $3,250 per tonne, whereas the global capex per tonne is between $5,500 and $10,000.
It has plans to set up large end-to-end recycling plants in other countries like the US, Poland, Indonesia, and Australia in phases.
2. Batx Energies:
Batx Energies has recycled 220 million batteries, and, most recently they collaborated with the Indian government to build off-grid charging stations based on second-life batteries.
The company's facility is capable of recycling and refurbishing 3,000 metric tonnes of batteries annually, with approximately 15% sourced from electric vehicles, as per co-founder Vikrant Singh. Just a year ago, EV batteries accounted for merely 6-7% of their intake, with the remainder sourced from phones, telecom, and other electronics industries.
Further away, the three-year-old company is in the process of setting up a new plant six times larger in size, dedicated to processing end-of-life batteries. It also wants to expand globally in markets like South Korea, Malaysia, the Philippines, and Singapore.
3. Exigo Recycling:
Exigo, another big player, has an existing capacity of 7,200 annual metric tonnes, plans on expanding the capacity to 2,00,000 TPA. It has a higher preference for processing NMC chemistry and serves clients like Panasonic India and Samsung India.
Our current annual recycling capacity is 10,000 metric tonnes. We will be adding two more production lines within the next three months.
Tesla has been known for making a good chunk of revenue via selling carbon credits — earned $1.46 billion from carbon credits in 2021 (3% of its revenue). These credits are sold to automakers exceeding emission standards, offsetting their regulatory non-compliance. However, as more companies develop their own EVs, Tesla’s carbon credit revenue is expected to decline. Tesla's reliance on carbon credits is likely to decrease as the market for them shrinks.
India introduced the 2023 Carbon Credit Trading Scheme (CCTS), covering both mandatory compliance and voluntary sectors. The compliance phase is slated to start in 2025-26, whereas the launch timeline for the voluntary carbon market is unspecified.
Very excited about the Carbon Removal opportunity from India. The market trends globally point to a major shift from avoidance credits to removal credits ($3Bn Market currently, estimated to grow 100x by 2050). Capturing this trend early is a great opportunity for young builders.
Jivraj Singh Sachar
Founder & General Partner, Indian Silicon Valley Capital
What We Think?
The next 10 years are about to be a wild ride for India’s EV market. We’re not just piggybacking on subsidies or foreign knowledge transfer; we're crafting a truly "Indian" story. Piyush Goyal didn’t lie when he said we might become the world’s biggest EV market by 2030.
The entire market opportunity is expected to be of $100 billion by 2030, but this growth won't only be driven by the govt. environmental goals but also by the economical utility EVs solve for the user.
The current “bottom-up” penetration is going to continue and 2W and 3W will continue to be the category leaders. We would need similar movements in other states as we have seen in UP, Maharashtra, and Karnataka.
So be it the B2B use or B2C use — the products fundamentally need to be more value for money for the user. The “aspirational angle” won’t work as much as the “economical angle”. In India, the more economical angel sales. That’s where EVs have to be. But, overall, the government's ambitious target of 30% EV penetration by 2030, coupled with initiatives like FAME II and production-linked incentives, along with state subsidies have created a supportive ecosystem for EV growth.
Interestingly, the notorious cold-start problem won’t be a discouraging factor for many users anymore since the rise of EV penetrations has solved word of mouth → solved customer confidence → solved customer conversion. There has been a proper snowball effect in place. The customer now is more open than ever to buying an EV if it serves economically and education is done right.
More customer education is something that all players — all across the value chain need to keep doubling down on.
We could see global desi brands and many new small winners in the 2 Wheeler categories with the pace of innovation happening in the country. India is already one of the biggest exporters of automobiles — if we build high-performing durable products with the best tech, Indian EV OEMs will tap into global markets.
It's not a surprise to see companies like Ather already planning for it.
Innovation won’t only be seen in the OEMs space, as there is an entire ecosystem that is blooming along with OEMs — finance, lending, dealerships, back-end components, batteries, and EV specialised softwares for — you name it. Everything needs to evolve.
The backside of the value chain is where India has been super dependent — be it raw materials or vehicle components like lighting, battery cells, and magnets.
This can change only with rapid innovation happening in the backend players building battery cells, packs, vehicle components, and infrastructure need to find a sense of how they mix business with innovation. While this happens, more vertical integration attempts by OEMs would also drive R&D and competitiveness, which would fastrack the innovation process.
This will be challenging yet exciting.
A lot of money would be poured into the deep-tech investments and R&D initiatives. While this capital can be obtained with the current bullish EV narrative, more companies need to figure out how to improve top lines so that they can sustain innovations and get more investors to expand. Lot of investments into critical components like motors, magnets etc. need to be done in order to reduce dependencies on imports.
For software, we would see many new companies coming into the game to only solve EV BMS, battery, and data tracking solutions. In finance, we would see more NBFC and fintech companies coming that would innovate on tech to solve NPAs and underwriting. As the market matures, there will be a growing focus on aftersales and recycling too; but this could be gradual.
One surprising tailwind for the industry has been the growth of the ride-hailing and new-age delivery era — be it food delivery, quick commerce, or e-commerce, everything will significantly open new doors of innovation for economical EV solutions.
This surge has will scale growth for both E2W and E3W as the economics would be prioritised over any other variable.
All this will have a ripple effect on the country's blue-collar employment, uplifting the per capita incomes & expanding the size of India's growing gig economy that is expected to employ 20 million people by 2030.
But, one interesting part of the EV puzzle will be how India charges its vehicles. For B2B commercial use of E3W, swapping seems to be working and presents a scope to scale because the emotional attachment of the user is replaced by pragmatism. However, the script flips in the B2C world.
But, overall, what seems true is that electrification of India's transportation sector represents more than just a shift in driving technology. It offers a pathway to reduced oil imports, improved urban air quality, and new economic opportunities. As India navigates this electric future, the decisions made today will shape not only the nation's mobility landscape but also its energy security and environmental sustainability for decades to come.
We, at GrowthX, are pumped for what’s next for EVs in India and hope that this in-depth deep dive was of value for you.
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