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2024 to be an Electrifying Year for EV Industry

The proposal for enhancement of outlay of ‘FAME Phase II’ from INR 10,000 crores to INR 11,500 crores has been examined by Department of Expenditure (DoE) and approved considering the objectives of the Scheme.

January 02, 2024. By Anurima Mondal

Adoption of Electric vehicle (EV) in India has constantly been on the rise. The year 2023 witnessed record registrations of electric vehicles in the country. According to data on Vahan, the registrations amounted to 15,29,614 units, up 49 percent from 10,25,123 EVs registered in the previous year.

With the aim to enhance India’s manufacturing capabilities and exports in the automobile and the automobile components sector, the government approved a Production-Linked Incentive (PLI) Scheme for this sector with a total outlay of INR 25,938 crores over a period of 5 years.

Meanwhile, the proposal for enhancement of outlay of ‘FAME Phase II’ from INR 10,000 crores to INR 11,500 crores has been examined by Department of Expenditure (DoE) and approved considering the objectives of the Scheme. This phase mainly focuses on supporting electrification of public & shared transportation, and aims to support through demand incentive e-vehicles including e-buses.

Talking about the government policies on EV, Srikumar Krishnamurthy, Senior Vice President & Co-Group Head - Corporate Ratings, ICRA Ltd. said, “Government efforts to enhance EV adoption through policy support have been instrumental in accelerating the electrification adoption over the past few years. In addition to significant outlays under various policies (FAME II, PLI, etc.), which are aimed at capability development and driving demand, the Government has also been focused on improving the charging infrastructure across the country to help address range anxiety concerns related to EVs.

Significant investments are underway by both legacy OEMs and start-ups across various facets of the EV ecosystem. Various automotive component manufacturers are also investing materially to develop component capabilities, with a view to taking a lead in the space. Even as the funding environment from banks and NBFCs remains cautious, several start-ups have raised funds in the current year as well, with investors continuing to remain bullish on the growth of the EV sector in the country.

A confluence of factors such as improving product portfolio, charging infrastructure, and financing availability as well as a gradual decline in battery prices would aid in the acceleration of EV penetration across segments over the medium term. The industry remains focused on enhancing the domestic value addition with a view to building capabilities; given that the battery remains the key component, the creation of a local battery cell manufacturing ecosystem remains key to enabling India to achieve its electrification targets. The road to profitability for the industry remains long, however; thus, a timely fund-raising to support the capital structure/competitiveness of start-up players would be critical.”

An exciting year awaits

2024 is expected to be an interesting year for the EV industry as it continues to transform consumer and commercial mobility.

Sharing his views on this, Ketan Mehta, CEO & Founder, HOP Electric Mobility said, "As we enter a new year, I am pleased to share the significant progress HOP Electric Mobility has made in the realms of innovation and sustainability. Our commitment to research and development has reached new heights, demonstrated by our ongoing work, including the development of liquid cooling battery packs. This technological advancement not only represents progress but also enables us to offer warranties on batteries equivalent to the entire lifespan of our electric bikes.

"According to NITI Aayog, the projected size of the two-wheeler EV market is estimated to be between INR 35,000 Crores and INR 40,000 Crores by FY26. India's electric vehicle (EV) industry has notched an impressive milestone, clocking over 1.2 million sales in the first ten months of 2023, surpassing the entire retail sales of the preceding year. Over the past three years, we have experienced notable growth, achieving a 100 percent annual increase. Looking ahead to 2024, we are currently in the developmental phase of the Nimbus platform, scheduled for launch in the upcoming financial year. This platform features distinctive elements, including our work on rare earth-free magnet electric motors, showcasing our commitment to environmentally conscious technologies."

"As we face the challenges and opportunities of 2024, we look forward to another year of accomplishments, milestones, and a continued journey towards a cleaner, greener future. Here's to a year where innovation meets sustainability, and where HOP Electric Mobility continues to drive positive change."

Mayank Bindal, Founder & CEO, Snap E Cabs, which is an on-demand, app-based fleet of 100 percent Electric Vehicles, added, "It has been an incredible and a successful year at Snap-E cabs. We have been able to reach our goals and targets for the year 2023 and eagerly look forward to 2024. With many new strategies coming into shape, we are now in the phase of executing these strategies. We plan to start operations in new cities in 2024. We have new SKU's being built for our customers like Out Station, premium vehicles and hourly rentals. We have new opportunities from our B2B clients and we look forward to building stronger relationships with them in the future. We look forward to working closely with new technology partners and charging partners to improve and make the entire experience delightful to our customers and making efficient sustainable business in the process. Thanking and wishing all our costumes and clients a very happy new year and may the coming year bring all the happiness and joy in their lives. We will keep providing the services as per our commitments and hope to serve the community and give back a reliable, eco-friendly & a comfortable ride in the future."

In March 2023, the Ministry of Heavy Industries announced sanction of INR 800 crores under FAME II to the PSU Oil Marketing Companies (OMC) - Indian Oil (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) - for setting up 7432 public fast charging stations across the country.

To enhance India’s manufacturing capabilities and exports for the manufacture of Advance Chemistry Cell (ACC) in India, Government approved a PLI scheme for setting up manufacturing facilities for Advance Chemistry Cell (ACC), Battery Storage in India, with an outlay of INR 18,100 crores for 7 years.

VG Anil, CEO, ARENQ (manufacturer and distributor of storage batteries) said, "In this dynamic year for batteries, we've reshaped energy norms. From driving EVs toward eco-friendliness to extending solar power's reach, batteries have been key. They're not just power sources; they're symbols of our green commitment. Solar's after-hours prowess and UPS reliability owe much to battery might, ensuring uninterrupted operations. These strides exemplify our pursuit of sustainability and efficiency. Reflecting on our progress, let's push battery tech boundaries, scaling sustainability. Together, we'll keep powering a cleaner future, uniting innovation with lasting environmental impact."
Highlighting the establishment of United States (US)-India Energy Storage Task Force, Dr. Rahul Walawalkar-Founder & President of IESA, President & MD of Customized Energy Solutions India Pvt. Ltd and Chair of India Electric Mobility Council (IEMC) added, “India with G20 and other initiatives taken by the government has strengthened various government-to-government ties such as through Quad with Japan, Australia, and the US as well as other bilateral ties with African countries as well as Latin America. I think the groundwork has been laid. Now what we need to focus on in 2024 is how business-to-business ties get strengthened in these countries and that's where the US-India Energy Storage Task Force (ESTF), is going to play a key role. At IESA, we are playing a similar role working with the Government of Western Australia to strengthen ties between Western Australia and Australian companies and Indian companies focusing on mining and supply chains. We are also looking forward to creating similar partnerships with other interested countries in 2024.”

Sameer Aggarwal, CEO & Founder Revfin Services concluded, "As 2023 draws to a close, it becomes evident that this year has marked a significant turning point for India's electric vehicle (EV) sector. The industry has not merely achieved sales milestones but has evolved into the year of consolidation, where stakeholders from manufacturers to financial institutions are actively collaborating to create a robust ecosystem for sustainable mobility.

In the backdrop of an impressive 1.2 million EV sales within the first ten months, a testament to the increasing demand for electric two-wheelers for both personal mobility and last-mile deliveries, the sector is experiencing a wave of transformation. This year has seen stakeholders strategically aligning their efforts, epitomized by cost-effective product deals introduced during the festive season.
Looking forward to 2024, the outlook remains promising, with projections indicating that electric two and three-wheelers are poised to surpass the one million mark. Beyond mere sales figures, this signifies the industry's potential, driven by India's expansive market and population.

What sets this year apart is the collaborative spirit that has taken root. It's not just about sales; it's about the year of ecosystem creation. The convergence of efforts from original equipment manufacturers (OEMs), financial institutions tailoring competitive financing options, and government support through incentives and subsidies is shaping a conducive environment for clean energy initiatives. As stakeholders join forces to revolutionize sustainable mobility, this year has become a beacon for transformation in the transportation landscape. The electric vehicle industry in India is not just growing; it is consolidating, creating ecosystems, and fostering a collaborative approach that will undoubtedly drive transformative shifts in the years to come."
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