Slow charging times, range anxiety, insufficient infrastructure, and lack of consumer confidence are just some of the barriers slowing down EV adoption. Can the personal mobility buyer overcome these roadblocks to drive the country into a sustainable future?
16 Jan 2025 | 2788 Views | By Ketan Thakkar & Prerna Lidhoo
For Rohit Barua, a Mumbai-based investor, electric vehicles (EVs) seemed like a logical upgrade. With over 25 years of experience driving internal combustion engine (ICE) vehicles, he took the leap of faith two years ago. Over 55,000 kilometers later, his experience paints a mixed picture of EV adoption in India.
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For Rohit Barua, a Mumbai-based investor, electric vehicles (EVs) seemed like a logical upgrade. With over 25 years of experience driving internal combustion engine (ICE) vehicles, he took the leap of faith two years ago. Over 55,000 kilometers later, his experience paints a mixed picture of EV adoption in India.
While EVs bring undeniable benefits, including minimal maintenance and better running costs, the challenges persist; particularly when it comes to infrastructure and convenience. “You can increase the number of chargers as much as you want, but if it takes a minimum of an hour to charge, quick trips become impossible to plan,” he said.
The drop in efficiency at higher speeds, unpredictable charger availability, and the need for meticulous planning add layers of inconvenience that many ICE vehicle owners might find unappealing. “If you’re on an outstation trip, you’re dependent on finding a working charger that’s not already occupied.
The peace of mind you get with a petrol or diesel car just isn’t there yet with EVs. A drained battery could mean postponing an evening outing—or worse, packing the entire family into the car to visit the nearest fast charger,” he says.
Like Barua, many early adopters’ experience shows that owning an EV requires big behavioral changes in how people plan and use their vehicles—a challenge India’s growing EV ecosystem needs to overcome to attract more users. For the millions yet to make the switch, these pain points—if not addressed with a sense of urgency—could hinder wider adoption.
The Cost Factor
Cost parity with ICE vehicles remains one of the biggest hurdles to widespread EV adoption in India. While the long-term savings in fuel and maintenance are appealing, the initial price of EVs is still significantly higher than that of conventional petrol or diesel cars. For many Indian consumers, especially in a price-sensitive market, the higher upfront cost is a major deterrent, making EVs seem less accessible.
Despite GST and road tax benefits, the gap in pricing—driven by expensive battery technology—continues to limit EV adoption. Until EVs become more affordable and comparable to ICE vehicles, cost will remain a critical barrier to mass adoption. On average, electric cars are priced around 30-50% higher than comparable ICE cars.
Similarly, when it comes to two-wheelers too, EVs are costlier, with electric motorcycles and scooters often priced about 20-30% higher than their ICE counterparts. “People have realized that running costs are obviously better, and overall, you will get a better proposition.
Over time, the price difference between the two has also narrowed, and we are no longer in a position where buying electric means paying a 50% premium,” says Ravneet Phokela, Chief Business Officer at Ather Energy. He adds that the sweet spot for electric two-wheelers is Rs 1 to 2 lakh. “Needless to say, if the price is lower, we will sell more.”
While price may be a key barrier in the PV space, for two-wheelers, the bigger challenge lies in building customer comfort, particularly as EVs expand into Tier 3 and Tier 4 cities. Additionally, certain markets, such as those in the North, have been negatively impacted by the influx of subpar Chinese EVs over the past decade. These poorly made products often broke down quickly, leaving customers with no choice but to discard them. This experience has left lasting scars, and rebuilding trust in these markets will take time and consistent delivery of high-quality EVs, Phokela believes.
Kumar Rakesh, Associate Director, Equity Research, BNP Paribas, too agrees that the two-wheeler industry has reached a scale where it can achieve "reasonable volumes," making it possible for cost benefits to begin materializing.
However, on the passenger vehicle (PV) side, it is relatively more complicated. “For PVs, it will take a little longer for the price parity to come as compared to two wheelers because the scale is not there and the battery pack needed is relatively bigger. Something like battery as a service can be one solution that can drive more demand,” he adds.
Customer understanding is crucial, and it largely depends on the visibility of vehicles around them. “Are there enough models on the road? Seeing more EVs in their surroundings gives customers the confidence that it's no longer a niche product but is transitioning into a mainstream option, and that shift is already happening, at least for two-wheelers,” he notes.
Experts point out that the PV segment would need more players to enter the segment. By the next year, major players including Hyundai, Maruti Suzuki, and Mahindra are set to enter the EV market with their own offerings. These entries are expected to boost consumer choice, drive affordability, and enhance the segment's overall appeal, marking a critical step toward mainstream adoption.
“That should definitely help, because only companies which have a combined share of less than 30% of the ICE market have launched EVs. When the rest start launching, it expands the addressable market. And as they start launching more EV products at lower price points, that should also help improve adoption. PM e-drive policy should also cater to some of the concerns around charging and range anxiety,” Rakesh said.
Shailesh Chandra, Managing Director, Tata Passenger Electric Mobility, believes that the interest and excitement in the market will grow significantly as we see intense launch of products by all the competitors. “The launch intensity itself will trigger very high demand. So, you'll see all the OEMs now installing chargers at their dealerships. What we have been able to achieve in five years by being a player with 14-15% market share, if all the 100% come in, it will be a five-times multiplier,” he said.
Experts anticipate that India's EV transition in the PV segment will remain a gradual process instead of the sharp acceleration many had hoped for, especially given the current low penetration numbers. The market is likely to evolve incrementally over the remainder of the decade. For the PV segment, initial projections suggested a conservative 15% EV mix by 2030, according to BNP Paribas. However, achieving this target will require sustained efforts in improving infrastructure, reducing costs, and enhancing consumer confidence.
“More than the two wheelers, the challenge would be on the PV side because the price difference is larger and will take longer to catch up. Another challenge is a shift in demand towards hybrid. Even if it’s only the state governments that start turning favorable towards hybrids, the way UP government has, then even my 15% projection for EVs will start looking aggressive in that scenario,” Rakesh adds.
Hybrid Strategy
Hybrids—which combine an internal combustion engine and an electric motor—are seen as a transitional solution, offering better fuel efficiency without the infrastructure demands of full EVs. However, they face a major disadvantage in terms of taxation. While EVs attract a lower Goods and Services Tax (GST) of 5%, hybrids are taxed at a much higher rate of 28%, making them less financially attractive despite their perceived practicality. Due to various other cesses and taxes on top, the effective tax rate on hybrid cars in India is about 48%.
Despite the tax disadvantage, hybrids and EVs currently have similar market penetration in India at around 2%. This indicates that consumers may prefer hybrids due to their lack of dependency on charging infrastructure, which remains underdeveloped in the country.
However, EV makers feel that this dual focus on hybrids and EVs is splitting attention and resources, potentially slowing down the momentum needed for a full-scale EV transition. According to Chandra, there was a negative narrative around EVs globally which has hurt EV adoption in India as well.
“If you have a narrative which is too negative about electric, people will wait and let the dust settle down. It definitely deters a customer who is ready to buy a car, especially when you start elevating the status of some other technology and in the process, damage the image of EVs,” he said. “That's like looking at the future facing backwards.”
However, RC Bhargava, Chairman, Maruti Suzuki India, says the way toward carbon neutrality is not electric versus hybrid; it’s actually electric, hybrid, ethanol, biogas versus petrol and diesel. “If you move from a pure-petrol or diesel car to a hybrid which gives you 30-35% better consumption, should the petrol and the hybrid car be taxed at the same rate? The ideal range for a hybrid could be Rs 5 -10 lakhs. Today the hybrid runs only on petrol. A hybrid that could run on CNG, like a flex-fuel hybrid, could be a viable option,” he said.
Chandra, however, questions the logic of going behind non-EV alternatives. “If you have 500 km range products and charging infra that is becoming more and more ubiquitous, the drivability of electric cars is good as that of any other product and your running costs are significantly lower. So, why would you choose any other option,” he asks. Ultimately, he says, it will be EV versus all. “Eventually, you have to compare with CNG, hybrid, diesel, petrol; all are competing against this destination technology as of now,” he adds.
According to Rakesh, this is a significant challenge for companies that have heavily invested in EV technology with a long-term vision, especially as the market's pace of adoption remains uncertain. “The number of options available for hybrids is less and the price points are higher, and despite that the penetration is pretty much similar to EVs.
That just tells the kind of pull hybrid technology possibly has among customers. The customers are getting convinced that they want to buy the new technology. It's just that they are not fully convinced that EV is that technology that will enable them to give up the flexibility that the older technology used to give them,” he said.
Across the globe, hybrids have continued to grow despite incentives for EVs and customers are increasingly coming to a realization that the hybrid is possibly a good transient technology before moving to EVs.
Puneet Gupta, Director, India & ASEAN Automotive Market, S&P Global Mobility, agrees that there has been slowing demand in terms of EV penetration because other technologies are also taking shape. “There needs to be an approach of pluralistic technologies like CNG, ethanol, biogas, etc. for India going forward. The real reason why hybrids are rising is because people are seeing it as a replacement of diesel technologies,” he said.
Gupta’s projections suggest a diversified energy mix by 2035. Hybrid vehicles are expected to reach around 19% penetration, reflecting their transitional appeal for fuel efficiency and ease of adoption.
EVs, on the other hand, are forecast to achieve a significant 32% market share as infrastructure improves and costs decrease. Meanwhile, CNG vehicles are projected to hold steady at approximately 17-18%, appealing to cost-conscious consumers and those seeking lower emissions without transitioning to electric. “As a country you need local solutions. OEMs have to think about the next 20 years. There's a big transition happening and not everyone is speaking the same language,” he said.
Meanwhile, RC Bhargava also believes India needs EVs which are essentially designed for intra-city use.
The Charging Bottleneck
India's EV charging infrastructure has grown significantly, with public charging stations increasing from 1,800 in 2022 to over 16,000 in 2024. However, this still falls short of the required scale to support mass EV adoption, given projections for nearly 50 million EVs by 2030. It is estimated that to achieve a recommended ratio of one charger per 40 EVs, India will need to install over 400,000 chargers annually, totaling 1.32 million by the end of the decade. In this context, lack of widespread charging facilities remains a major hurdle for those considering a shift to electric mobility.
The growing interest from charge point operators and OEMs in the charging infrastructure sector, coupled with substantial subsidization, is expected to accelerate progress. “OEMs would like to show some level of collaboration on the charging infrastructure side and there will be huge subsidisation by them. Once this accelerates, there will be chargers in the right location. There will be collective advocacy and fight for ensuring that every customer gets the right to have a charger installed in their society or offices,” Chandra says.
Santosh Iyer, Managing Director & CEO, Mercedes-Benz India, too, believes that charging bottlenecks can be solved if the industry collaborates on the technology. “One thing which we have been requesting time and again is democratised charging. When you look at charging infrastructure, it's still segregated. It will be great for India to have one single unified platform where all charging companies can be operated and then the payment gateway, etc., becomes simpler,” he said.
Chandra adds that getting charging infra at the right spots is the key. “There are clear hotspots where if you put the charging infra, the utilisation will go very high. If we are able to sort out these issues, I think this will give tremendous confidence. We have to sort out the issue of home charging. Many times, it is the society which decides. A person should have the right to buy an electric vehicle and have the facility of charging in their residential complex,” he said.
For two wheelers, interoperability of public chargers is one of the major concerns that customers are expected to face as the industry scales up. “It’s not a bummer today but as we go deeper and wider, it is a critical requirement for this business, because when it comes to scooters, it's not range anxiety, it's charging anxiety. Therefore, access to public charging points becomes important. Also, when there's interoperability, it also becomes attractive for independent charge point operators to come and jump into the game because it's an asset that needs to be built,” Phokela said.
But fundamentally, he adds, nobody debates on the fact that we need interoperability. “The challenge of fast charging isn't the chargers themselves, but it's the ability of the scooter to be charged at a certain pace. And that varies from OEM to OEM,” he says.
Rakesh sees the charging bottleneck more as a technology problem rather than an infrastructure problem. “Even if we have the charging network available relatively better than what it is today, spending a couple of hours for charging still is not a very convenient way of transportation. So it needs better technology, not just a lot of infrastructure,” he said.
While some companies are developing batteries capable of faster charging, there is a pressing need for a robust fast charging network. Advancements in technology and infrastructure are crucial to reducing overall charging time and enhancing the user experience.
Currently, customers still face compromises, but significant progress will come with improvements in both battery technology and charging systems. A truly seamless experience requires a dual focus on advancing battery capabilities and upgrading charging technology, as infrastructure alone will not be enough to meet consumer expectations.
Lower Incentives
One of the major reasons why the pace of EV adoption is not picking up is because incentives have been coming down. Penetration levels have fallen dramatically in other markets where this has happened. In India, however, the market is expected to pick up over the next 6-12 months. “Of course, it is not picking up at a pace at which it would have been if the incentives were kept stable, but the cut hasn't completely discouraged consumers from moving to EVs. There is a strong business case for electric vehicles and it’s getting well understood by consumers incrementally,” Rakesh points out.
According to Rohan Kanwar Gupta, Vice President & Sector Head - Corporate Ratings, ICRA Ltd, despite the lowering of demand incentives, the total cost of ownership (TCO) for e2W continues to be favourable vis-à-vis ICE vehicles, aided by substantial savings on running costs.
“The favourable TCO would thus continue to support adoption for the EV segment, with consumer awareness on fuel savings, and the acceptability of the segment substantially improving over the last two years. The road to profitability for the industry remains long. Additionally, the entities in the sector also remain exposed to working capital blockage related to subsidy receivable and an inverted GST structure. In this context, the timely raising of funds to support the capital structure/competitiveness of start-up players would be the key,” he said.
Chandra believes that one thing the government can bring more from a predictability perspective is a more consistent roadmap towards EV adoption. “It should not be changing quite frequently. Industry would only need to have a more long-term view of how the regulation roadmap is going to be so that we can prepare for that. From a consumer perspective, a lot of Indians travel globally, they don't want to be seen in outdated cars and they would like to have everything at a lesser price, which is an opportunity for frugal innovation,” he said.
The good thing, he adds, is that the four-wheeler industry has not been too subsidy dependent. “That is also a reason for slightly slower penetration and not many OEMs are investing ahead of time. Still, in the last five years, government support has been good. It has brought that excitement which was needed,” he adds.
Gupta, too, believes that OEMs need at least a four-year view so that every OEM can prepare accordingly. “The kind of ups and downs we saw in the past are bound to come if there’s no clear long-term roadmap,” he adds.
OEMs say that while there is a relationship between policy and the volumes going up and down month on month, the underlying assumption that the market is dependent on policy isn’t entirely correct. “That would have been true in the early days when the subsidy was Rs 55,000-60,000. Our stand has been that the subsidy is not required to sustain the industry today, it is essential to ensure acceleration, but the caveat here is not just the fact that you need subsidy but also predictability in these things,” Phokela said.
He adds that subsidies artificially take volume up and down. “If you just average it out over a 12-month period, you won't see a dramatic difference, but the moment there's news about the subsidy going away, that month the sales go up, and the next month they come down. You could never be assured that the market is growing, because it was artificially driven by a very high level of subsidy,” he said.
Because of this, two-wheeler players say that when developing their financial and pricing strategies, they do not factor in subsidies anymore.
Uncertain Residual Value
Unlike traditional ICE vehicles, EVs face rapid advancements in battery technology and concerns about long-term battery performance, leading to apprehensions about their depreciation rates. This especially affects the luxury EV buyers, who often expect higher resale value for their premium investment, and are wary of the unpredictability in second-hand market demand. This uncertainty is further compounded by a lack of established benchmarks for EV depreciation which can influence market dynamics. Addressing these concerns is critical for fostering confidence and accelerating the adoption of luxury EVs, experts say.
“Luxury EV penetration is much more doable in India as compared to the mass market segment. The first set of customers, when they see that their cars are getting good residual values and the battery life is well beyond 10-15 years, those fears will be taken away and the adoption will even be faster,” Iyer says.
OEMs believe that that low residual value for EVs is more of a perception than the reality. “Once EVs start coming in to the resale market, I think that will be taken care of. But there are the bigger issues right now that need to be addressed first,” Hardeep Singh Brar, senior vice-president and national head of sales & marketing, Kia India said.
According to Brar, the three primary factors that are leading to EV demand slowdown are the price gap between ICE and EV, which currently is about 40-50%, and range anxiety – which can be addressed by improved range or by charging infra growth. Another factor, he says, is the resale value which is also important for the Indian buyer. Improving domestic battery production and advancing R&D could positively impact the resale value of EVs in the long term.
Experts point out that introducing fail-safe technologies can help in better quality control, which can ensure more reliable and durable batteries. This would alleviate concerns about battery degradation, which is a major factor affecting EV resale values.
Localised production and reduced reliance on imports can also lower battery costs, making replacements or upgrades more affordable. As India's EV ecosystem matures and aligns with global standards, the perception of EVs as a risky investment is likely to decline, driving up resale values, especially for premium models.
Randheer Singh, former director at NITI Aayog, stresses the need for accelerated efforts in cell production, module assembly, and battery pack manufacturing. While domestic capabilities are improving, gaps in R&D and reliance on imported raw materials may limit achievements to half the target.
Singh advocates for strategic investments in advanced manufacturing, robust supply chains, and a skilled workforce training to bridge this gap. Collaborating with Japanese firms, he is also working on introducing failure analysis technologies to enhance domestic cell production.
Harshvardhan Sharma, who leads the automotive retail consulting practice at Nomura also highlights the challenges faced by Indian battery manufacturers in scaling production amid fluctuating EV demand and subsidy uncertainties. He emphasizes the importance of ongoing R&D to develop advanced battery technologies and meet global standards, especially as new chemistries emerge.
“Indian battery manufacturers are investing in R&D to develop advanced battery technologies. However, they need to catch up with global leaders in terms of innovation and efficiency. Current manufacturing capacities may initially fall short of the rapid EV adoption rate. The Indian battery makers' technological readiness will be tested as newer battery chemistries come in,” he notes.
Rakesh points out that there needs to be a sense of urgency to launch EVs. “There are some companies who have been pretty slow in adopting EVs. There are some companies who have not even launched their EV while being the market leader. They want to see the market stabilise before they become aggressive or have a much more pronounced product strategy,” he says.
In conclusion, it can be said that, to ensure a sustainable transition for the EV industry, demand must grow organically rather than relying on incentives or loss absorption by the companies. This can be supported by innovative financing solutions and lower production costs, creating a more viable business model for the sector. Currently, the EV sector's way forward is beset by a mix of technological hurdles, shaky infrastructure, and lack of consumer confidence—challenges that must be overcome if India wants to achieve its target of 30% EV penetration by 2030.