The electric vehicle industry in India achieved the milestone of 1 million unit sales in the financial year 2023. The lead was taken by the electric two-wheeler segment as per the Society of Manufacturers of Electric Vehicles (SMEV).
Electric Vehicle Performance FY23
However, 61% of the entire 1,177,938 units of electric vehicles was contributed by the electric two-wheeler (E2W) segment. Which was remarkably short of the targets set by the Niti Aayog.
The industry sold 7,26,976 high-speed E2W (speed>25km/hr) in the E2W segment. Compared to the 1million plus E2W sales set against the NITI Aayog’s projection for FY23.
The second spot with 34% (4,01,841 units) sales was by the electric three-wheelers, followed by 4% (47,217 units) sales by four-wheelers and electric bus stood at 1,904 units or 0.16%.
As per the SMEV report the E2W adoption fell month-on-month (MoM) over the targets. Around 25% of annual shortfall was observed by the E2Wsegment set by Niti Aayog and various research organizations.
SMEV stated the shortfall in the E2W segment was not due to a lack of consumer demand but rather the sudden withholding of more than Rs 1,200 crore subsidy. Which was by the majority of original equipment manufacturers (OEMs) to customers due to the delay in localization.
Another ₹400cr of the OEMs operating in the premium end was blocked due to the charges of under-invoicing to evade the FAME norms. Further, it crippled the business operations due to extreme insufficiency of working capital.
Moreover, the FAME2 revision impacted the E2W adoption. As a result, there was 35% decrease in their price. Earlier due to low volumes was shunned, however, in late 2021 component supply chain gained momentum. Further, suppliers showcased their interest of building EV components to OEMS.
The average time taken by a supplies is 12-18 months to localize, and currently the capacities are as per demand.
Moreover, the rumors over subsidy claims and localization content per vehicle created hindrance towards the E2W dream run. As a result, the government had to enforce policy instead of a pragmatic approach of flexibility in implementation. As few factors were out of control for the OEMs.
Nevertheless, a 62% growth by the EV industry compared to FY22 sales of 7,26,861 EV units is commendable.
The Indian governments EV mission of 80% adoption by 2030 seems challenging based on the 5% adoption in FY23.