From-$934M

India's EV Sector Faces 37% Funding Dip to $586M, While 1.9M EVs Sell in 2024, Boosting Sales by 24.5%

 

Funding to India's electric vehicle sector, especially its investment segment, has drastically declined, an estimated drop of 37% from $934 million in 2022 to $586 million in 2024. The recent sharp downturn largely follows a shift from changed policy and slower sales growth.

Uncertainty from new government policies, specifically PM-E drive schemes, seems to contribute to a relatively conservative investment behavior. 

 

Changes in policy give room for cautious investor

 

The new scheme, an upgraded FAME-II replaced with it, has attracted fewer subsidies for electric vehicles. This seems to hurt electric four-wheeler and hybrid vehicle owners who would no longer find eligibility in the new terms and conditions.

With an incentive cap of Rs 5,000 per kilowatt-hour offered to electric two-wheelers for the first year, down from Rs 15,000 the previous year, investors are now focusing on returns over scalability. This cautious approach has seen a significant drop in the funding volume despite the number of deals remaining constant at 44.

 

EV Sales Remain Strong Despite Challenges

 

Despite these challenges, India's EV sector has not come to a halt. In 2024, over 1.9 million electric vehicles were sold, marking a 24.5% increase over the previous year. 

However, the growth rate has slowed compared to previous years, where the sector saw growth rates as high as 50%. The two-wheeler segment, led by companies like Ola Electric, continues to drive overall sales, contributing over 1.13 million units to the total sales of 2024.

 

High-Profile Investments Amid Reduced Funding

 

Although the funding environment has been more cautious, high-profile deals are still being made. Ather Energy raised $71 million from the National Investment and Infrastructure Fund, making it a unicorn and readying it for an IPO. However, such deals are now becoming the exception as investors become more choosy.

 

Government's Long-Term Vision Brings Hope to EV Sector

 

India's government remains optimistic, with a 30% target for EV penetration in new vehicle registrations by 2030. In the long run, that bodes well, even though the short-term issues seem insurmountable. Areas such as battery swapping, charging infrastructure, and component manufacturing are gaining new investments. 

In fact, Battery Smart, the market leader in battery swapping, reached 55 million swaps and received $65 million in funding, indicating that innovation in the EV ecosystem is very much alive.

 

Road ahead for India's EV industry

 

It really depends on how the policy shapes up and the way market responses change as a result. Further, with more investments towards the development of charging infrastructure and technologies relevant to it, India will be well-positioned in global efforts toward electric mobility.