Further observations on the Indian EV market4 Nov 2023 08:36
Affordable EVs power India growth
India’s electric-vehicle market is taking off because of an abundance of cheap new models.
Sales of passenger EVs in the country rose to 75,000 in the nine months through September — that’s more than double the volume during the same period last year.
While their share of the total market remains small at 2.4%, a closer look at the underlying trends highlights an important insight for EV makers hoping to make inroads in India: Some 86% of all electric cars sold this year were priced under $20,000.
Many of them were introduced this year, including the cheapest — MG’s Comet mini car that sells for less than $10,000. Tata Motors’ best-selling Tiago compact EV accounted for 39% of EV shipments and retails for around $10,500. Deliveries of the model started early this year.
When looking at statistics across all drivetrains, it quickly becomes clear that affordable small cars and compact SUVs are dominating. About 69% of cars sold in India last year were priced below $15,000, while 27% cost less than $10,000. Top-selling combustion-engine models such as Suzuki’s Swift and Wagon R retail for less than $8,000.
Offering EVs at similar prices has helped automakers secure demand from private customers, especially from those commuting to their offices in India’s urban markets. Because of low operating costs, battery-powered cars are also popular among ride-hailing and taxi companies.
The surge in demand has sparked promises to produce more EVs locally. Automakers have committed nearly $5.4 billion in investments to set up or expand their EV manufacturing facilities in India, data from BloombergNEF shows.
Pledges have come from domestic players Tata Motors and Mahindra & Mahindra but also Korean automakers Hyundai and Kia. Vietnamese EV startup VinFast recently disclosed plans to set up an EV manufacturing facility in the country by 2026. The government will subsidize some of this capacity, part of its efforts to reduce India’s reliance on imports for key EV components.
In June, after meeting Prime Minister Narendra Modi in the US, Tesla Chief Executive Officer Elon Musk said it’s “quite likely” that the manufacturer will make a significant investment in India. This came after a standoff between the automaker and New Delhi on the issue of high taxes on importing cars to India. Reports suggest that India might now extend tax breaks to automakers that commit to set up domestic production lines. Musk’s comments should be taken with a pinch of salt though, given that talks of potential new plants have come up during nearly all of his meetings with foreign politicians in recent months.
Commitments to set up local battery plants have also proliferated, supported in part by government subsides. Companies including Tata Group, Amara Raja, Exide Industries and Ola Electric – all local players – have announced a total of 12.6 gigawatt-hours of cell manufacturing capacity. M
Sign In
Follow the stocks
