India Wants To Lead The EV Market. Here's What It Should Do

According to the International Energy Agency (IEA), global EV sales reached approximately 14 million units in 2023, accounting for 18 per cent of all cars sold worldwide. This marks a substantial increase from 14 per cent in 2022, indicating robust growth in the EV market

These developments underscore the accelerating momentum of the global transition to electric mobility, highlighting the increasing role of EVs in achieving cleaner energy and reduced carbon emissions. India, with its vast potential and growing automotive market, stands at the cusp of an EV revolution. 

By studying China’s successful strategies and customising them to the Indian context, India can not only lead in EV adoption but also establish itself as a key player in the global EV value chain.

China’s eV Success: A Blueprint For India

China’s dominance in the EV sector can be attributed to a comprehensive approach that blends policy support, massive investment, innovation and local market focus. India is the world’s third-largest automotive market, and its transition to EVs could significantly impact both domestic and global markets.

India’s rising middle class, urbanisation, and increasing concerns about air pollution present a compelling case for electric mobility. However, the road ahead requires focused policy measures, significant investments, and technological advancements.

The pillars of China’s EV strategy are:

Government Support and Incentives: China has invested heavily in EV infrastructure and offered strong government incentives, including subsidies for EV  purchases, tax rebates, and rebates for battery manufacturers. The Chinese government has committed billions of dollars to support EV development and production, aligning national policy with global sustainability goals.

According to the International Energy Agency (IEA), China’s EV sales in 2023 reached 6.9 million, accounting for the vast majority of global EV sales. Figure 1 below highlights EV sale numbers across the globe.

As shown in Figure 2, electric car sales are booming in emerging markets, with Vietnam and Thailand leading in 2023. While India and Brazil lag, policy support; local manufacturing incentives, and affordable Chinese models are driving growth.

Vietnam’s surge is fueled by strong government policies, purchase incentives, and local player VinFast offering affordable eVs. India’s PLI Scheme is set to boost domestic production, signaling future growth potential.

Investment in Infrastructure: China’s success is also rooted in its heavy investment in charging infrastructure. As of July 2024, China has 3.2 million public charging stations, making it the world’s largest EV charging network.

In contrast, India had only 12,146 operational public eV charging stations as of February 2024, highlighting a major infrastructure shortfall. India can take a cue from China’s early investments in this area. Figure 3 below gives you the ratio of eVs to EV chargers.

The Indian government aims for EVs to make up 30 per cent of new private vehicle registrations by 2030, totaling 80 million EVs. To support this, India will need 3.9 million charging stations, with a ratio of one station per 20 vehicles, according to the study by Game Changer Law Advisors. 

China’s massive investment in EV infrastructure offers key lessons for India: Prioritising early investment in a widespread and accessible charging network, including fast-charging stations, is critical for boosting adoption.

The lack of charging infrastructure remains one of India’s biggest barriers to EV adoption. The government needs to adopt a multi-pronged approach similar to China’s — investing in a nationwide charging network, incentivising private companies to build EV charging stations, and integrating EV charging infrastructure into residential and commercial spaces.

China’s approach of integrating charging stations in urban, suburban, and remote areas, along with public-private partnerships, has been pivotal.

Local Manufacturing and Supply Chain Development: China has focused on fostering a robust domestic supply chain, with local players such as BYD, NIO, and XPeng leading the charge. Through government subsidies and innovation in battery technologies, China has reduced EV production costs, making eVs more affordable to consumers. Additionally, Chinese companies have ramped up their global presence through partnerships and investments. 

These days, start-up Chinese EV firms are releasing models that are 30 per cent faster than legacy fossil-fuel automakers of the USA, Europe and Japan. China also leads global battery research, with its institutions contributing 65.4 per cent of high-impact publications, far outpacing the US at 11.9 per cent.

This rapid pace of innovation and research positions China as a dominant force in the global EV and battery markets, setting a challenging benchmark for the rest of the world.

India’s automotive sector is mature, with major global players already operating in the country. However, India must now focus on building a strong EV  ecosystem, starting with domestic manufacturing. Companies like Tata Motors and Mahindra Electric have already ventured into EV production, but scaling up local production requires substantial investment in EV-specific technologies like batteries, motors and power electronics.

One of the most crucial areas where India can take inspiration from China is in battery production. China’s dominance in battery manufacturing, led by companies like Contemporary Amperex Technology Company (CATL) and BYD, has helped drive down battery costs, making eVs more affordable.

Supported by significant government subsidies, CATL is producing 40 per cent of global EV batteries, and hence, setting the standards with high-capacity, fast-charging batteries that are essential to China's global dominance. Figure 4 below gives you some government support numbers and breakdown across the years

This dynamic government approach is key to driving eV adoption and securing global supply chain dominance. By 2023, industrial policy support faded as the EV industry matured, shifting focus to tax exemptions and attracting more players into the market. As the industry grew, the need for industrial policy diminished.

India should thus focus on building a local supply chain for lithium-ion batteries, sourcing materials domestically, and establishing manufacturing plants for battery cells and modules.

In addition to battery manufacturing, India can build expertise in vehicle assembly, electric drivetrains, and smart charging technology. By fostering innovation and creating a conducive ecosystem for eV startups, India could become a global manufacturing hub for EVs and related components.

EV Technology Standardisation 

China has mastered the art of standardising key EV technologies, from batteries and charging infrastructure to software systems, making scalability smoother for both local players and international giants. Chinese carmakers are taking it a step further by standardising everything from vehicle models to cutting-edge digital operating systems, which are crucial for smart cars.

With a clear regulatory framework around battery management systems (BMS), the Chinese government has ensured streamlined EV development. This approach not only accelerates innovation but also sets China up as a global leader in the electric vehicle revolution.

India's lack of clear and consistent regulations is a significant barrier to the sector's growth. While FAME and PLI schemes have provided incentives, the absence of standardised frameworks hampers interoperability between brands and charging networks, leading to fragmented infrastructure.

This inconsistency slows the transition to EVs, as consumers and manufacturers face uncertainty over compatibility. Clear regulations, similar to those in China, would foster smoother integration and accelerate adoption

Policy Framework, Incentives

The FAME India scheme has been key in boosting EV adoption in India, offering financial incentives for both consumers and manufacturers. Recent data shows India has sold 15.77 lakh EVs, sanctioned 7,210 electric buses, and approved 9,441 charging stations.

With EVs being only 2 per cent of the total cars sold, India can learn from China by providing more targeted subsidies and incentives aimed at both consumers and businesses, incentivising investments in research and deVelopment, and scaling up EV production capacities.

R&D and Technological Advancements

For India to stay competitive in the rapidly growing electric vehicle eV market, investing heavily R&D for battery technologies, smart charging solutions, and other EV components is crucial. India's focus should extend beyond just vehicle production to innovations in energy storage, long-range batteries, fast-charging infrastructure, and vehicle-to-grid technologies.

Government support, through schemes like NEEMP and PLI, has made a start, but further investment in collaboration between private industry, academic institutions, and government agencies will be essential to advance technological capabilities and foster homegrown innovation.

A key area where India can make strides is solid-state batteries, a technology being researched globally as the next step in energy storage. According to the IEA Global EV Outlook 2024, battery technologies account for over 40 per cent of an EV's cost, so advancements here will significantly reduce costs and enhance India's global competitiveness.

India’s Strategic Position In Global eV Value Chain

With its growing automotive market and government support, such as the PLI Scheme (which has allocated Rs 26,058 crores to promote eV manufacturing), India has the potential to lead in both eV manufacturing and component supply.

The country’s ability to produce cost-effective, high-quality components positions it well for low-cost manufacturing, which is particularly beneficial for targeting emerging markets like Southeast Asia and Africa.

Additionally, India’s leadership in information technology (IT) and software development provides a distinct edge in integrating smart technologies into EVs, such as autonomous driving systems, AI-powered diagnostics, and vehicle-to-grid solutions. This integration could make Indian-made eVs highly attractive in global markets where advanced technology is in demand.

India can leverage its expertise in electric two-wheelers, a rapidly growing segment both domestically and internationally. According to NITI Aayog, India’s electric two-wheeler market is expected to reach US$ 1.4 billion with a cumulative growth rate of 28.34 per cent by 2030.

By focusing on the electric two-wheeler market, which is gaining significant traction in regions like Southeast Asia, India can tap into the global demand for affordable, eco-friendly transport.

(The writer is a public policy and urban transportation enthusiast and specialist. Views are personal)