S&P Global Mobility has lowered India’s electric vehicle (EV) market penetration forecast for 2030, reducing it from 22% to 18.5%. Several challenges, including the slow adoption of electric passenger vehicles, underdeveloped charging infrastructure, and selective state incentives favoring hybrids, have contributed to this adjustment.

Challenges in India’s EV Adoption

One of the main reasons for the forecast revision is the slow uptake of electric passenger vehicles. Despite government initiatives to encourage EV adoption, the progress has been slower than anticipated. This has been further compounded by the lack of a widespread and efficient charging infrastructure across the country, which remains a critical barrier for potential EV buyers.

Another contributing factor is the approach of various states toward EV adoption. Some states have introduced incentives that lean toward hybrid vehicles rather than fully electric ones, resulting in fragmented growth across the country. The inconsistent policies and incentives are creating a patchwork system that favors certain types of vehicles over others, slowing the momentum of full electrification in India.

Rise of Hybrid Powertrains

Amid the challenges to full EV adoption, hybrid powertrains are gaining significant traction in India. Hybrid vehicles, which combine internal combustion engines with electric motors, are seen as a bridge between traditional fuel vehicles and fully electric ones. This trend, referred to as “powertrain pluralism,” offers a middle ground for consumers hesitant to make the full leap to electric vehicles.

Hybrid powertrains provide the flexibility of using both electric and fuel-based energy sources, making them an attractive option for many Indian consumers. This is especially true in areas where charging infrastructure is limited, as hybrids do not rely solely on electric power. The growing preference for hybrids could further slow the adoption of fully electric vehicles in the coming years.

Focus of Indian Automakers

Despite the rise of hybrid technologies, major Indian automakers such as Tata Motors and Mahindra are maintaining their focus on full electrification. These companies are avoiding a mixed-approach strategy and are investing heavily in developing fully electric vehicles to capture the growing demand for EVs in India. Their commitment to full electrification signals a long-term vision for an EV-dominated future, even as hybrids gain ground in the short term.

Tata Motors, in particular, has emerged as a leader in India’s EV market, with several electric models already on the road. The company’s strategy revolves around producing affordable electric cars that cater to the mass market, a crucial factor in driving widespread EV adoption. Similarly, Mahindra is working on expanding its electric vehicle portfolio, with plans to launch multiple new models in the coming years.

Decline of Traditional Fuels

As electric vehicles continue to gain market share, the demand for traditional fuels like gasoline, diesel, and compressed natural gas (CNG) is expected to decline. This trend is likely to be most pronounced in the mini-car segment, which has traditionally been dominated by fuel-efficient, low-cost vehicles.

The shift away from traditional fuels will have significant implications for the automotive industry, particularly for companies that rely heavily on the production of internal combustion engine vehicles. As more consumers transition to electric or hybrid vehicles, the demand for gasoline and diesel-powered cars is expected to decrease, forcing automakers to adapt their product offerings to meet the changing market dynamics.

Growth of Plug-In Hybrids

Plug-in hybrid electric vehicles (PHEVs) are also expected to play a key role in India’s transition to electric mobility. These vehicles, which can be charged via an external power source and operate on both electric and fuel power, are gaining popularity as an alternative to fully electric vehicles.

One of the driving forces behind the growth of PHEVs in India is the involvement of Chinese original equipment manufacturers (OEMs). Chinese automakers have successfully introduced PHEVs in their domestic market, and similar partnerships are emerging in India, where PHEVs are expected to follow a similar growth trajectory. The success of these vehicles in China serves as a blueprint for their potential in India, especially in segments where full EV adoption faces challenges.

Battery Electric Vehicles (BEVs)

Battery electric vehicles (BEVs), which rely solely on electric power, are at the forefront of the shift toward alternative powertrains in India. This trend is particularly evident in the two- and three-wheeler segments, where BEVs are leading the charge in terms of adoption. These smaller electric vehicles are well-suited to India’s urban landscape, where shorter commutes and lower price points make them more accessible to consumers.

The success of BEVs in the two- and three-wheeler segments is encouraging, as it demonstrates the viability of electric mobility in India. However, the same level of success has yet to be replicated in the passenger vehicle segment, where challenges such as cost, range anxiety, and infrastructure limitations continue to hinder widespread adoption.

Global EV Adoption: India Lags Behind China, U.S. Comparison

India’s EV market trajectory closely mirrors that of the United States, where challenges in non-electric segments have slowed the pace of adoption. In contrast, China remains the global leader in electric vehicle adoption, with EVs accounting for 60% of new car sales.

The U.S., however, lags significantly behind China, with less than 10% of new car sales being electric. India, facing similar barriers to full electrification as the U.S., has been slow to catch up to China’s rapid growth. Factors such as infrastructure, policy support, and consumer acceptance are key to accelerating India’s EV market in the coming years.

Conclusion

While India’s electric vehicle market is growing, the revised forecast from S&P Global Mobility highlights the challenges that remain in achieving widespread adoption by 2030. The slow uptake of electric passenger vehicles, underdeveloped charging infrastructure, and the growing popularity of hybrid powertrains are all contributing factors to the adjusted outlook.

However, the commitment of Indian automakers to full electrification and the success of BEVs in the two- and three-wheeler segments offer hope for the future of electric mobility in India. The rise of plug-in hybrids, particularly through partnerships with Chinese OEMs, adds another layer of complexity to the market, offering consumers multiple pathways to transition away from traditional fuels.

As India continues its journey toward a cleaner, more sustainable automotive future, overcoming these challenges will be critical to reaching the country’s long-term goals for electric mobility.

Article By
Prashant Sharma