Indian EV sales in January: Industry awaits next triggers as sales plateau across segments

Indian automobile industry’s electric vehicle (EV) penetration and volume have plateaued across segments in recent months. According to the equity research firm BNP Paribas’s latest report, implementation of stricter norms for two-wheelers (2Ws), absence of the market leader for three-wheelers (3Ws), lack of a wide range of model offerings for passenger vehicles (PVs) are believed to be the major reason.

The report added that the Electric two-wheeler sales volume rose 118 percent year-on-year (YoY), but was flat month-on-month (MoM) in January 2023. It further added that as Internal Combustion Engine (ICE) sales picked up, EV penetration in two-wheelers declined month-on-month to 5.1 percent from 5.7 percent in December.

In terms of electric two-wheeler sales, Ola Electric remained the market leader and saw its share rise to 28.3 percent, followed by TVS (16.2 percent), Ather (14.2 percent) and Hero Electric (9.9 percent). However, in terms of volume share, Ather gained the most, while Hero Electric lost the most.

In addition to this, new battery norms and the halting of FAME II benefited electric two-wheeler manufacturers like Ola, TVS, Hero Electric and Ather as they gained a total market share of over 68 percent in January. Among the top-five manufacturers, the sales volume of Ather Energy grew the most (19 percent MoM), while Hero Electric’s dipped the most (21 percent MoM).

The report also revealed that the sales volume of Karnataka grew the fastest (28 percent MoM), while West Bengal’s declined the most (40 percent). Between April-January 2023, electric two-wheeler penetration in the country grew to 4.5 percent compared to the same period in last year. The penetration improved significantly in Delhi, rising to 9.3 percent from 3.8 percent in financial year 2022.

Electric three-wheeler sales grew 74 percent YoY but dropped 3 percent month-on-month. EV penetration in this segment was nearly 50 percent, down 3.3 percentage points month-on-month. Despite maintaining their leadership in the segment, Mahindra and Mahindra lost some market share in January compared to December.

Mini Metro’s month-on-month volume growth of more than 25 percent was the highest, while Gujarat and UP saw the fastest electric three-wheeler m-o-m sales growth. During the current financial year, electric three-wheeler penetration in the country improved to 54 percent, rising 8.3 percentage points from FY22 levels.

Electric passenger vehicle sales grew 115 percent YoY but were flattish month-on-month in January. Moreover, the EV penetration in the passenger vehicle segment, which has been falling in recent months, slipped to 0.7 percent in January.

Tata Motors remained the market leader in the electric passenger vehicle segment with a 69 percent volume share. However, in terms of m-o-m sales growth, BYD India had a 4 percent share in the electric passenger vehicle industry, up 358 percent.

Rajasthan and Delhi saw solid m-o-m electric passenger vehicle sales growth at 46 percent and 26 percent, respectively. Between April-January 2023, electric passenger vehicle penetration improved to 0.8 percent as against the same period last month.

In terms of penetration, Delhi saw the most progress reaching 1.8 percent versus last year’s 0.4 percent. Tata Motors EV share in the PV segment also dropped below mid-single digits. The report points out that the start of Tiago EV and XUV400 sales could be the positive catalysts needed for electric passenger vehicle sales in the coming months.

The government, in the Union Budget 2023, increased the outlay for FY24 FAME incentives by 80 percent YoY, along with other policy announcements promoting EVs. In addition to this, the Punjab Cabinet had also approved a new EV policy that offers incentives for electric-2Ws and electric-3Ws as the state aims to achieve EV sales at 25 percent of new sales.

In addition to the FAME incentives, finance minister Nirmala Sitharaman also announced that the concessional duty on lithium-ion battery cells for manufacturers (for EV production) is extended till March 31, 2024. She also extended customs duty exemption to imports of capital goods and machinery required for manufacturing lithium-ion battery cells for EVs.

Electric Two-wheelers: The Ola S1 Air's sales starting from April can be the next positive catalyst for electric two-wheeler sales and mix

Electric Three-Wheelers: Bajaj Auto's entry in the segment is the next positive catalyst for this segment

Electric Passenger Vehicles: The start of sales of Tiago EV and XUV 400 are positive catalysts for this segment and mix in the coming months.