2023 has been an attention-grabbing 12 months for the Indian EV market. There have been hiccups alongside the way in which, however the total market has continued to forge forward. Like what we did for the year 2022, time to take inventory of issues and take a look at the outlook for 2024.

Again, just like the 2022 exercise, all the info right here has been sourced by the Indian central (federal) dashboard (Vahan portal). The portal aggregates information from all of the RTO (Regional Transport Offices) the place automobiles are registered. However, not all states have onboarded onto Vahan. Currently, of the 36 States and Union Territories, 34 have onboarded. And of the 1428 RTOs, 1341 are registered with Vahan. The information that’s used accounts for 90–95% of all automobile gross sales in India. Hence we won’t be absolute figures as they don’t seem to be full, however we will take a look at the share of electrical automobiles in every section and market share of assorted manufacturers. As these are proportional information, they might be extra nearer to precise figures and we will take the info from a directional sense.

We will divide the Indian auto section into 4 broad segments as is the norm within the automotive media right here. They are:

1. Two wheelers — These embrace all powered two wheeled automobiles which have a most velocity above 25 kms per hour. They are broadly of two classes — Scooters and Motorcycles.
2. Three wheelers — These are three wheeled automobiles (Tuk Tuks, Rickshaws) and embrace each used for shifting individuals and items.
3. Passenger automobiles — These primarily embrace vehicles and different automobiles used for private mobility with greater than 3 wheels. For sensible functions, we will assume this to be equal to vehicles.
4. Commercial automobiles — These embrace a variety of automobiles from giant vans, buses to mini vans and smaller good carriers.

Electric Two-wheelers

Electric two-wheelers had a curler coaster of a journey in 2023. The share of EVs elevated barely from 4.1% in 2022 to five% in 2023. Sales as tracked in Vahan portal elevated from 601,030 in 2022 to 854,892 in 2023 (42.2% enhance 12 months on 12 months). This is compared to an 11.2% enhance within the total two-wheeler market in India from 14.48 million in 2022 to 17.01 million automobiles in 2023.

In the start, there have been expectations that share of EVs inside the section would attain double digits (10%+) by the top of the 12 months. However, the section hit a velocity bump in the midst of the 12 months when the federal authorities revised the gross sales incentive supplied to electrical two-wheelers (referred to as the FAME II scheme).

The authorities revised the FAME-II subsidy amount to ₹10,000 ($121) per kWh as in opposition to the sooner quantity of ₹15,000 ($182) per kWh. It additionally capped incentives on e-2Ws at 15% of the ex-factory value of automobiles from 40% earlier. Most electrical scooters presently promoting have a battery capability of round 2.5 to three.5 kWh, retailing between ₹120,000 to ₹150,000 ($1,450 to $,1800). This resulted in discount in subsidy of ₹20,000 to ₹25000 ($250–$300).

The change in subsidy additionally impacted launch plans of main gamers. Ola Electric, the present market chief, initially deliberate to launch its most inexpensive mannequin, the S1 Air, at a value of ₹84,999 (~$1,000), comparable in value to the highest promoting ICE two-wheeler mannequin from Honda Motors (the Honda Activa). However, with the change in subsidy, Ola Electric revised its S1 Air price to ₹119,000 ($ 1450), considerably greater than the unique value.

As may be seen within the chart above, share of EV gross sales was trending at 5%+ to start with of the 12 months, tanked to three.5% in June publish subsidy revision, and took the remainder of the 12 months to achieve again to the earlier ranges.

From a model share perspective, the market is consolidating in the direction of 4 main gamers from 5–10 gamers with small market shares. The prime 4 manufacturers now account for 71% of the entire gross sales, up from 62% in 2022. Ola Electric stays the market chief with 31% market share, adopted by TVS at 19%, Ather Energy at 12%, and Bajaj at 9%. [For people not familiar with these brands, Ola Electric and Ather Energy are pure electric startups while Bajaj and TVS are established OEMs with significant ICE market shares.]

Outlook for 2024

Forecasting for 2024 goes to be tough given the uncertainty on the FAME II subsidy entrance. The unique subsidy mandate was until March 2024, and there are conflicting stories on the opportunity of extension or not of the subsidy past that. We ought to get readability on this within the annual funds in February 2024.

Now on the model entrance, now we have Ola Electric launching its subsequent set of inexpensive S1 X scooters with costs ranging from ₹89,999 ($1,089) [assuming continuation of FAME II subsidy]. This is analogous in value to the highest promoting ICE variant by Honda. Combined with different manufacturers additionally affordable fashions, together with the entry of Taiwanese EV pioneer Gogoro into Indian market, I anticipate EV share to steadily enhance to 7–8% of the entire 2-wheeler market and cross one million models in annual gross sales in 2024.

This is assuming continuation of the FAME II subsidy. However, if then again we do see a discount/termination in subsidy, then the EV share would behave just like 2023, a drop in gross sales instantly publish discount and recovering to related or barely greater ranges later within the 12 months.

[There are news reports that the Japanese brand Honda will soon launch the EV version of its most popular ICE scooter, the Honda Activa, in 2024. However, I remain skeptical given that I have been seeing these news report for the last few years — 2019, 2021, 2022.]

Cars (Passenger Vehicles)

Cars (passenger automobiles or PVs for brief) had an excellent 12 months almost about gross sales of EVs (BEVs). BEV share of whole vehicles bought stood at 2.1%, practically doubling from 1.1% in 2022. Sales tracked within the Vahaan portal elevated from 45,885 in 2022 to 79,388 in 2023 (115% enhance 12 months on 12 months), with the general market rising from 3.46 million models in 2022 to three.78 million models in 2023.

Tata Motors continues to be the dominant participant within the EV area, accounting for 75% of all BEVs bought in 2023. In 2022, a majority of the BEV gross sales got here from one mannequin, the Tata Nexon EV. In 2023, we had the launch of the Tata Tiago EV, one of the crucial inexpensive EVs within the Indian market. With beginning costs of ₹869,000 ($10,500), the mannequin is cheaper than the common promoting value ($12,500) of vehicles in India and it actually doubled the BEV month-to-month gross sales whole. Today, with 3 BEV fashions, EVs account for 10% of Tata’s automobile gross sales in India.

We additionally now have vital contributions from two extra manufacturers. We have the Chinese–UK model MG with its MG Comet EV, priced just like Tata Tiago EV, raking in ~1,000 models of gross sales each month. Mahindra & Mahindra launched their first full fledged electrical SUV, the XUV 400 (corresponding to the Tata Nexon EV). Mahindra is ready to rack up 500 gross sales each month.

Outlook for 2024

2024 goes to be an thrilling 12 months, with deliberate launches of a number of new BEV models throughout manufacturers, together with Korea’s Hyundai–Kia group, ICE market chief Maruti Suzuki (subsidiary of the Japanese model Suzuki), and a few Indian manufacturers — Mahindra & Mahindra and Tata Motors.

However, besides probably Mahindra & Mahindra’s XUV 300 EV, most of those fashions shall be on the premium finish. As talked about earlier than, the common promoting value of vehicles in India is round $12,500 and many of the vehicles shall be priced ₹200,000 ($24,000) or greater. At practically two instances the common promoting value, these fashions won’t be needle movers by way of EV adoption.

For me, Indian EV adoption for vehicles will nonetheless be pushed by Tata Motors in 2024, too. In 2024, now we have Tata Motors planning to launch Tata Punch EV, Tata Harrier EV, and Tata Curve EV. The Tata Punch EV would be the necessary mannequin to look out for. The ICE variant is presently one of many prime promoting SUVs in India, and if we go by earlier Tata Motors pricing, we will anticipate the Tata Punch EV to be priced between the Tata Tiago EV and Tata Nexon EV ($12,000 to $18,000), making it probably the most inexpensive electrical SUV available on the market.

With these launches, I’d anticipate EV market share to steadily enhance to three–4% by the top of 2024.

Three-wheelers (Tuk Tuks, Rickshaws)

The gross sales of electrical 3-wheelers have remained fairly regular, with 54.8% market share in 2023. This is almost the identical as 54% market share in 2022. As I defined last year, the market is fragmented with diesel, CNG (compressed pure fuel), and electrical variants. Other than Mahindra & Mahindra, the electrical section lacks progressive startups or established OEM manufacturers. Most of the manufacturers and fashions are low-speed rickshaws imported and assembled right here. Hence, the adoption charge has plateaued. The ICE market chief on this section is Bajaj Auto, which has nearly 60% share within the ICE section. The firm lastly launched its first electrical 3-wheeler in 2023 — albeit, out there initially in 2 cities.

From two cities, Bajaj Auto has lately expanded into 10 cities in North India. Currently, Bajaj Auto has a market share of 2.2% of the electric 3-wheeler market, promoting round 1000 models a month. By March of 2024, it plans to expand to 40 cities, earlier than reaching 250 cities in FY-25. I anticipate the electrical share of the 3-wheeler section to lastly develop in the direction of 60%+ in 2024, considerably boosted by Bajaj’s entry into this area. We also can anticipate a major market consolidation with Bajaj and Mahindra rising their share.

Commercial Vehicles (CVs)

Commercial automobiles in India span a variety of vehicular segments and embrace buses, heavy-duty vans, gentle passenger and cargo vans, amongst others. Similar to world developments, the electrification of this section continues to be in its infancy. Electric variants accounted for 0.53% of all CVs bought in 2023, practically doubling from 0.29% in 2022.

Outlook for 2024

We can anticipate incremental will increase in electrical share of this section. The two sub-segments the place electrification shall be comparatively quicker are buses and vans.

In buses, there are several government initiatives to section out diesel buses from inter-city and intra-city transportation (together with a joint US–India initiative to switch 10,000 buses). Given the general public and federated nature throughout municipal, state, and federal governance, we will anticipate non-linear progress.

As far because the van section, plenty of automobiles are primarily used for last-mile provide chain transport. Given the aggressive internet zero targets of huge retailers and with the deliberate launches of new models throughout manufacturers, this section will proceed to be electrified.

Summary

2023 was an attention-grabbing 12 months almost about electrification of the Indian transport sector. The sector confronted many challenges however has managed to beat the identical and keep its momentum. 2024 will see electrification achieve regular power throughout segments. There is an out of doors probability that we’d see the 2-wheeler section get away into double-digit shares and vehicles transfer in the direction of 5% share. We will circle again once more subsequent 12 months to see the way it seems.

By Lakshmisha K S, Technology fanatic, ex-management guide and newbie economist, NITK-Surathkal, XLRI alumnus