India’s EV Market Jumps To 7.4% In 2024: SBI Caps Report

India’s EV Market Jumps To 7.4% In 2024: SBI Caps Report

The evolution of the electric auto industry revolution is in full swing—1 in 4 vehicles sold globally in CY24 was electric, a leap from 1 in 40 just five years ago, finds SBI Caps report. The report accredited this latest growth to lower operating costs, cushioned by tax breaks and subsidies making EVs more accessible despite higher upfront prices.

The SBI Caps report stated, “India is catching the EV wave, with penetration rising from <1% in CY19 to ~7.4% in CY24. With low vehicle ownership and unique growth drivers, India has a chance to leapfrog, making EVs the first car for many, just as it skipped 3G for 4G. By FY30.”  The report found, “The EVs could hit 30-35% of annual sales, though ICE vehicles will still dominate the roads, coexisting with EVs for years to come.” It further explained, “India’s EV boom rides on a web of incentives: 5% GST vs. ~28% for most ICEs, lower road taxes in many states, FAME and PM E-DRIVE subsidies, and cheaper operating cost when using electricity compared to petroleum products due to favorable tax structure.”

Global EV Market

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For global EV giants setting up locally, the ecosystem thrives. The report explained, “The auto giants retrofitting popular ICE models into EVs to cut costs and ease adoption may remain a trend. However, mass EV adoption hinges on advancing battery technology and charging infrastructure.” In global EV hubs like China, the US, and Europe, specialists like Tesla and BYD dominate, leveraging their tech-first approach while ICE giants play catch-up. In India, however, incumbents lead the charge.

The report compared India’s growth in the EV market with the international market and found, “India’s late-market entry leaves little room for innovation or first-mover advantage once demand scales up. EVs as a sum of auto parts: battery and charging infrastructure development. In this, the electronic drive units, making up ~50% of an EV’s cost, are key differentiators from ICEs. With China dominating cell production and critical minerals, localising the battery ecosystem is vital. India’s PLI for ACC aims to address this.”

Global Market Sale

Backward Integration As A Key 

The report found, “Currently, OEMs outsource ~75% of their battery needs, but backward integration is set to push this to ~50% by FY30, driven by alliances and JVs rather than purely organic efforts. India’s charger density lags global standards. Of 25,000+ chargers, only a fraction are fast.”

Financing Opportunities 

Innovation in the funding ecosystem is the need of the hour The report found, “The major OEMs announced over Rs 1 trn in capex to transition to EVs, primarily driven by incumbents leveraging strong cash reserves. However, the real investment opportunities lie within the EV ecosystem.”

It added, “Approximately Rs. 500-600 bn in capex is expected to achieve ~100 GWh of EV battery capacity by 2030, while another Rs. 200 bn will be required to expand public charging infrastructure to 90,000 chargers by FY30. On the financing front, EV consumer lending remains underdeveloped, with limited participation from banks due to high LTVs and the lack of a robust secondary market. Developing comprehensive lending policies across the EV value chain remains a work in progress.”

Global Battery Prices Decline

The report added, “The global battery prices have been on a downtrend, as raw material supply outpaces ever-growing battery demand, augmented by technological evolution. Notably, CY22 bucked the trend owing to volatility in raw material prices caused due to geopolitical tensions. Despite receding prices, concerns persist over the concentration of much of the battery supply chain in China.”

The report mentioned, “LFP and NMC batteries remain ubiquitous in the EV world. Newer battery technologies are emerging such as sodium-ion which improve energy density, charging speed, and overall performance. Sodium ion batteries have the potential to be 20-30% cheaper than Lithium Iron Phosphate batteries. Besides this, there is R&D going in solid-state batteries as well.”

Battery prices