Right from rolling out the red carpet to Tesla with a new electric vehicle policy to the PM E-Drive policy, 2024 has more than seen its share of ups and downs in India’s efforts in embracing electrification for its auto industry.
It was in mid-March this year when the Centre launched its new EV policy which experts said was nothing short of going the extra mile to woo Tesla. The criteria for automakers here was to invest at least INR 4,150 crore (USD 500 million) over three years, with conditions to achieve 25% domestic value addition (DVA) in this timeframe, going up to 50% in five years.
The Centre also launched the Electric Mobility Promote Scheme (EMPS) early this year with an outlay of INR 500 crore and an initial tenure of four months (April 1 to July 31, 2024), which was later extended by two months. However, this only created more uncertainty among industry players on the future direction of the EV policy.
Tesla did not bite the bait since it had its own share of problems to reckon with and Elon Musk, its CEO, was in no mood to invest in India where the returns on investment would be slow in coming. In fact, the new EV policy was given the cold shoulder en masse across the auto industry.
VinFast setting up plant in Tamil Nadu
The silver lining in the cloud, however, was the announcement by Vietnamese EV maker, VinFast, to set up a plant in Tamil Nadu. The kitty will include both cars and two-wheelers and it will be interesting to see how quickly VinFast can get its products into the market.
The Centre has, however, continued to step on the gas with a host of schemes to promote EV adoption. These include PM E-DRIVE, PLI Auto Scheme, SMEC, PM E-bus sewa, PLI ACC Battery Storage scheme etc. The idea is to encourage local manufacturing and create more jobs.
This would ideally happen in sync with the PLI-Auto scheme designed for component makers at an investment of INR 20,715 crore for automobiles and INR 10,472 crore in incremental sales (as of September).
The first incentive disbursement is scheduled this fiscal and the Ministry of Heavy industries has said that 82 of the 115 applications received have been approved with an investment of INR 42,500 crore.
PLI scheme aims to improve manufacturing capabilities
The PLI scheme aims to enhance India’s manufacturing capabilities for advanced automotive technology products and will covers the period from FY 2023-24 to FY 2027-28, with incentive disbursements happening from FY 2024-25 to FY 2028-29.
Incidentally, the FAME II scheme launched in 2019 at a budget of INR 11,500 crore did not do too badly. According to the Ministry of Heavy Industries, as per October 31, 2024, INR 8,844 crore has been spent comprising INR 6,577 crore for subsidies, INR 2,244 crore for capital assets, and INR 23 crore for other expenses. All in all, 16.15 lakh EVs have been incentivised where the breakup includes 14.27 lakh e-2Ws, 1.59 lakh e-3Ws, 22,548 e-4Ws, and 5,131 e-buses.
PM E-DRIVE for green mobility
PM E-DRIVE comes with an outlay of INR 10,900 crore and will extend from October 1, 2024, to March 31, 2026. This scheme aims to promote green mobility and develop the EV manufacturing ecosystem. Thus far, INR 600 crore in claims have been submitted under the scheme, with INR 332 crore disbursed as of November 20, 2024.
In PM E-DRIVE, the Centre has extended the demand incentive for cargo electric three-wheelers in November at a reduced rate for the current fiscal. This was a result of the exhaustion of an allocated subsidy for electric cargo three-wheelers for FY25 in early November. This demonstrated a faster-than-expected adoption of electric vehicles in the cargo three wheeler industry which augurs well.
Adoption of EVs won’t be possible solely through financial incentives and the need of the hour is a strong focus on enhancing human resource skills. The Automotive Skill Development Council (ASDC) strives to promote skill development in the sector by collaborating with educational institutions and industry leaders like BYD to host initiatives such as the Innovate-a-thon.
These competitions encourage students and professionals to propose innovative solutions for challenges in the EV ecosystem, fostering creativity and practical problem-solving.
“Skilled professionals ensure superior EV maintenance and customer service, increasing trust and satisfaction among EV owners, thereby encouraging adoption,” said Vinkesh Gulati, Vice President, ASDC. The number of training centres and certified professionals increased significantly in 2024, widening the accessibility of EV-specific skill development initiatives, added Gulati.
2025 – A year for significant EV launches
2025 is set to witness several significant EV launches, including Maruti Suzuki’s entry into the electric segment with the e-Vitara, Toyota’s e-Urban Cruiser, Hyundai’s electric version of the popular Creta, Mahindra & Mahindra’s recently showcased EVs and more.
“This underscores the importance of localisation efforts, which are still ongoing. High upfront costs, financing gaps, and uneven charging infrastructure remain concerns. I believe India’s EV story is no longer just about mobility but about energy security, manufacturing dominance, and economic inclusion,” said Randheer Singh, CEO, ForeSee Advisors and Ex Director Emobility, NITI Aayog.
According to him, the script for 2025 will hinge on execution – turning policies into products, infrastructure into impact, and vision into velocity. At a global level, EVs may face challenges from the Donald Trump administration where the ‘America First’ policy will see imposition of high import levies.
The good news eventually is that the two and three-wheeler space in India is embracing electrification aggressively borne out by the growth numbers from the previous year. Ola Electric was the clear leader in two-wheelers for months but Bajaj Auto and TVS Motor have now surged ahead.
Road ahead: Tata or Mahindra
In cars, Tata Motors remains ahead but faces competition from Mahindra & Mahindra whose recent unveiling of its e-SUVs in Chennai created tremendous excitement with their design, styling and performance. A new tug-of-war is in the offing next year!
