EV Investments Up, But Hopes Pinned on Govt Policy Push

EV Investments Up, But Hopes Pinned on Govt Policy Push
EV Investments Up, But Hopes Pinned on Govt Policy Push

Everyone is salivating at the electric vehicle market pie in India! If the recent spate of investments is anything to go by, the EV segment is touted to be among the leading hero sectors driving India’s growth. However, stakeholders seek clarity and concrete policy initiatives from the government to make further inroads into the segment.

“Several factors contribute to the increasing investments in India's electric vehicle (EV) segment. India boasts the world's largest untapped market, particularly in the two-wheeler sector, presenting an enticing investment opportunity. Growing demand, driven by a young and affluent population eager to embrace new technologies, further fuels investment interest," said Arindam Lahiri, chief executive officer of the Automotive Skills Development Council.

The 2022–23 Economic Survey tabled in Parliament in December last year had pegged EV sales at 1 crore and 5 crore jobs in the sector by 2030. Leading think-tank, the Centre for Energy Finance, expects India's EV market to be $206 billion by 2030.

There is no denying that demand for EVs has been on the rise. According to the Ministry of Road Transport and Highways, electric vehicle purchases spiked by 51% year over year to 740,000 in April–September. This number is expected to cross a record of 1.5 million during the entire fiscal year.

StartupTalky takes a closer look at this demand, the reasons behind the rise in investments, and the roadblocks that need to be addressed.

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Investments Galore
Harsh Ground Reality

Investments Galore

If the recent spate of investments is anything to go by, the EV market has piqued the interest of investors, both in India and abroad.

Earlier this week, Paytm Chief Executive Officer and Co-Founder Vijay Shekhar Sharma launched a â‚ą30 crore fund to solely invest in EV and artificial intelligence startups.

Earlier this week, electric vehicle and appliance manufacturer–Wardwizard Innovations & Mobility said it would invest ₹2,000 crore for the development of an electric vehicle ancillary cluster in Gujarat. Other states are not too far behind. Karnataka is said to have received investments worth ₹25,000 crore so far in the EV and ancillary space, newspaper reports quoted a state minister as saying.

Earlier this year, British energy giant BP invested in EV delivery company Magenta and BluSmart Mobility, an EV-only ride-hailing company. Last year, global energy giant Shell backed the fund-raising exercise of Gurugram-based EV charging network company Statiq.

One of the reasons for this frenetic activity in the EV segment is because of the huge potential that India holds. S&P Global Ratings has pegged India’s EV penetration at 1.1%, a far cry from the 17.3% average in Asian countries.

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Harsh Ground Reality

Despite the investments in the EV and clean technology sectors, there is still a long way to go for demand to remain persistent, say venture capitalists and companies that StartupTalky spoke with. According to them, some key areas that need to be addressed in the EV segment include:

Charging Infrastructure

According to a report released by the Confederation of Indian Industries in June this year, India may need 1.32 million charging stations by 2030 to meet the government’s ambitious sustainability targets. As of January 2023, there were 5,254 charging stations in the country, as per data disclosed in the Lok Sabha by Union Minister RK Singh.

“India’s growing EV market penetration and battery development ambitions also introduce new barriers, including supply-chain worries related to the price and availability of semiconductors, metals and minerals, and battery cells, as well as concerns about insufficient charging infrastructure and electricity grid readiness,” a report by the International Institute of Sustainable Development said in August 2022.

Some state governments, such as Uttar Pradesh, have already started work on installing charging stations along five main express highways in the state.

Empowering Local Manufacturing & Research

Apart from improving infrastructure, incentives also need to be provided to component manufacturers and for R&D (research and development), analysts and corporations.

"In the last five to six years, funds have been going into battery manufacturing and battery technology companies, but that money is not there for the kind of R&D we need. It is slowly coming in. But the frugality with which Indians work is what we must leverage,” said Rohan Shravan, founding CEO of Tresa Motors, pointing to the higher cost of manufacturing.

Imported lithium batteries in EVs constitute around 50–60% of the cost of EVs, making them much costlier.

“The indigenous availability of the vehicles' batteries and spare parts will also impact the consumer mindset and also the manufacturer's mindset, as it will make it even cheaper for us to manufacture and sell,” said Kanchi Patel, director and co-founder of two-wheeler electric bike manufacturer Abzo Motors.

Co-founder of angel investing firm The Startup Capital--Aditya S. Kapur, however, feels looking out for newer innovative technology and incubating these ideas at home is far more important than just manufacturing.

“Our main concern is not to run our car on electricity. Our real problem statement is that we want a non-polluting automobile. We cannot call a car running on electricity completely clean. The whole process of innovation is completely linked to exploring. We need to give time to the stakeholders and allow them to explore things,” Kapur said.

Policy Push

Companies and investors are now looking to the government for easier policy regulations.

In 2015 and subsequently, in 2019, the government launched the Fast Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India. Under this initiative, buyers of EVs were incentivized by an upfront reduction in costs. However, owing to reports of malpractice, the government tweaked this initiative and reduced these incentives.

At present, the Department for Promotion of Industry and Internal Trade (DPIIT) is said to be working on a scheme to extend subsidiaries to electric four-wheeler makers based on the investments they make to manufacture locally, The Economic Times reported earlier this week.

Many stakeholders are also wary of putting their fingers into the EV pie as they are waiting for more concrete steps from the government.

“Till infrastructure is in place, heavy vehicles or large commercial vehicles are only bidding time, said Manas Pal, co-founder of Pedal Start, a Gurugram-based accelerator. He added, “The supporting component of this sector will play a very important role. Something on the charging stations, something on the battery development side, something on the battery manufacturing side, something on the battery recycling side, something on providing doles to people buying these commercial vehicles, something on the loan side will impact a lot,” Pal said.


The road to a pollution-free commute may seem like a long one, but at least the right noises have been initiated by stakeholders, including the government and investors. It, however, remains to be seen if India manages to hit a sweet spot in the EV sector. For now, this can be possible only with a concrete roadmap from the government, persistent corporate investments, and an ingenious sustainability model from think tanks.

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