2022 is proving to be a record year for EV sales giving a much-needed validation and confidence for consumers weighing their options between ICE vs EV.

Indian Startups are keeping up with the times to have the technological edge and the traditional companies too have quickly adapted to the change in consumer preferences. The government has been very proactive and supportive with EV policies and incentives. At the same time, it's great to see many states coming up with state level policies to support the EV industry.

The total cost of ownership is likely to reduce going forward with the growing demand and strong government resolve to bring parity between ICE and EVs. Hon'ble Road Transport and Highways Minister Nitin Gadkari, recently said 'The prices of all electric vehicles (EVs) will be equal to the cost of petrol vehicles in the country within one year'.

Overall EV financing remains a concern for the industry, and there is a need for government and the larger investor community to come together and come up with solutions.

PE/VC investors poured in around $1.7 billion in EV industry in 2021 while the number has touched approx. $666 million in 2022. With the growth in ESG and Climate specific funds, the investment momentum is expected to continue. As the startups and companies grow, we are seeing many new and 1st time investors join the bandwagon.

Fast adoption of EV across all the segments is truly the path to the green frontier.

I thank all of you for your support and look forward to your continued participation in IVCA initiatives which is working tirelessly to strengthen the Indian private equity and venture capital ecosystem.

I thank the EY and IndusLaw teams for putting together this report and for their detailed work.


The Indian Electric Vehicle ecosystem is currently in the initial stages of development but has been gaining traction. In 2021, EV registrations amounted to ~330k units, a jump of 168% from 2020. The sales were led by 2- and 3-wheelers - ~48% and ~47%, respectively - followed by passenger vehicles at ~4%. E-rickshaw/e-kart category (top speed less than 25km/ hr) takes the major share among three wheelers with ~45%. E-buses are included in others with a share of 0.36%.

The spike can be attributed to the need for personal mobility, increased awareness of the environment and rise in prices of gasoline (which have increased by INR 43 in the three years from 2019 to 2022). The second phase of Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME II) incentives have also helped in the increased adoption of e2W. Q1 2022 has already seen sales of almost 110k units.

Uttar Pradesh tops EV registrations in the country with ~20%, followed by Karnataka and Tamil Nadu. Of the overall 2-wheeler registrations, ~67% are from Karnataka, Tamil Nadu, Maharashtra, Telangana, and Rajasthan. Majority of the 3-wheeler registrations are in Uttar Pradesh, Bihar, Assam, and Delhi, which collectively account for ~75% of total sales. Maharashtra, however, boasts of the highest sales of passenger vehicles with ~3,700 units.

As of CY21, electric vehicles accounted for 1.1% of total vehicle sales and is expected to account for 39% of total automotive sales by CY27 growing at a ~68% CAGR over the next 5 years. The majority growth in EVs is expected to come from the travel segment, especially E3Ws and E2Ws due to fixed duty cycle and companies (E-commerce, groceries, shops) committing to going completely electric in their last mile deliveries.

Lack of charging infrastructure is one of the biggest challenges for the EV sector. Currently, there are only 1,742 charging stations in the country. This number is expected to increase to 100,000 units by 2027 to accommodate the increasing demand by ~1.4 million EVs expected to be on the roads by then.

Currently, India adds about 2.5 billion metric tons of carbon, or ~7% of the global emission. The ICE vehicular pollution contributes to ~40% of the total pollution in India. With this, it is imperative to usher in a strong push towards EV adoption to curtail the increasing pollution. EVs will help reduce exposure to VOCs (which are carcinogenic) and help improve life expectancy.

Climate change has led to a shift in global climate policy which requires the world to adopt a low carbon economy, thereby saving the planet from the adverse impact of climate change. Around 20 states in India have already come up with either a draft or final state level EV policy, these state policies overall aim to promote India's transition from ICE to EVs.

Improving the air quality issues, mitigating climate change, reducing dependence on oil imports and developing the EV industry are some common objectives of the policies published by the states. India has taken a leap towards a clean energy-based future as it is evident from the changes in the policies of the governments with respect to environmental protection.

In terms of investments, EV industry has attracted ~USD 6 billion in 2021 and is expected to gain USD 20 billion by 2030. EV market has observed strong attention from PE/VC investors in India with investments increasing from US$ 181 million to US$ 1,718 million (recording an annual growth rate of 849%). Ministry of Skill Development and Entrepreneurship has estimated that EV industry can create 1 crore direct jobs and 5 crore indirect jobs by 2030.


There has been a global paradigm shift in how the future of vehicles will evolve. While flying cars may not be seen as a feasible option in 2022, we have come a long way from the traditional fuel-guzzling vehicles to alternatives such as EVs, both in two-wheeler and four-wheeler segments. While Indian sentiments are clearly more oriented towards two-wheelers which occupy almost 70% of road presence, this does not seem to be limiting the development of four-wheeler EVs. India is actively investing in and promoting a market which is predicted to hit over a 9 million units mark per annum by the year 20271. The need to shift to an alternative fuel can be attributed to rising fuel costs and adopting cleaner energy sources. Climate change is an increasingly relevant concern, with every major nation actively acknowledging the problem and looking at real time solutions, which provides a further impetus to the shift to EVs.

The Indian automobile industry places heavy reliance on the use of traditional fossil fuels and non-renewable forms of energy which has raised concerns regarding its impact on the environment, climate change and the depletion of the non-renewable resources. To adopt a cleaner and more eco-friendly energy alternative, India has formulated policies to shift from traditional ICE vehicles to vehicles using alternate forms of energy, specifically EVs. Further, dependance on fuel imports and the consistently rising prices of conventional fuels have also prompted consumers to seek more cost-efficient sources of transportation. These initiatives for adoption of clean engines for both commercial and private vehicles has led to an increase in the number of manufacturers of EVs in the short and long distance transportation and last mile connectivity arenas2 . Mahindra & Mahindra, an Indian manufacturer of automobiles, plans to aggressively expand its range of EVs being offered in the Indian market and has planned for an investment of approximately USD 400 million whilst also looking at foreign investors3. TVS Motors, a two-wheeler manufacturer, is also in discussion with global private equity investors looking at investment of approximately USD 296 million to USD 493 million for business expansion into EVs through the launch of a new line of electric two-wheelers4.

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1. Secondary Research, Secondary Reports, EY-P analysis




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