Does the EV industry run out of juice?
Now, after a wild ride of electrifying growth, India’s EV market is finally dealing with an ugly reality — investors are pulling the clutch. The funding is even worse, dropping from $934 million in 2022 to just $586 million in 2024, and that is a sign that times are getting rough for the industry.
This decline comes despite policy adjustments and cutbacks under the new PM-E Drive Scheme that took over from FAME-II in October 2024.
The new subsidy scheme provides Rs 5,000 per kilowatt hour (kWh) for electric two-wheelers and a maximum of Rs 10,000 — a lot less than the old scheme of Rs 15,000 per kWh. Manufacturers have had to rethink pricing and profitability strategies in response.
Profits Over Promises?
Investors, once seduced by green revolution fever dreams, are now calling for better roads to profitability. We’re no longer at the mercy of a one-shot round, investors now want less weight, more model and unit economics before parting company doors.
However, even with the financial crisis, the industry still saw 1.9 million EV sales in 2024, an increase of 24.5% from 2023. But this is not even close to the 50% increase between 2022-2023. This lull in growth has made it uncertain whether the industry can achieve its long-term growth expectations.
Winners Amid the Slowdown
Some players are making money despite this tighter funding environment. Ather Energy received $71 million from the National Investment and Infrastructure Fund (NIIF), which made it a unicorn. Ola Electric was also publicly listed indicating confidence in the electric two-wheeler market.
But competition is tougher than ever. The sector is expanding, though at a slower rate, as more than 1.13 million electric two-wheelers are sold in 2024 compared to 860,000 in 2023. This future requires more agile thinking and more judicious action.
A Long Road Ahead
Hope remains with the government’s 2030 30% EV penetration goal. The opportunities are not just in cars, as investors are looking at components, charging infrastructure, and battery. These subsegments will expand as the ecosystem matures and bring in new flows of capital.
Is the Slowdown Temporary?
Although funding has slowed, there isn’t yet any hope. Investors would ultimately get a boost from the industry’s strength and India’s commitment to sustainability, stakeholder advocates think. With demand for environmentally friendly modes of transportation growing, EVs may yet emerge victorious after overcoming challenges to date.
Future of India’s EV Industry
India’s EV industry is at an impasse. Finances may have lurched, but innovation and expansion have not stopped. Investors are forking out a high price, but the industry’s promise is undeniable. With manufacturers turning to leaner business strategies and a shift to profit, the EV revolution might be over but not quite.
And it’ll be a matter of the next couple of years whether India’s EV market will be able to recharge and rip right back into action.
