Indian EV Industry To Represent a Rs 500 Billion Opportunity by 2025

Indian EV Industry To Represent a Rs 500 Billion Opportunity by 2025

Avendus Capital India EV industry Represent Rs 500 Billion Opportunity 2025

Avendus report describes the potential penetration of EVs in various vehicle segments, as well as the expected size of market of the EV industry in India

A recently published report by Avendus Capital on the electric vehicle (EV) industry titled ‘Electric Vehicles: Charging towards a bright future’ provides an understanding of EVs in the Indian context, with a global background. With the present and projected level of EV penetration in the country, the report expects EVs in India to represent a market with a possible value of Rs 500 billion by 2025.

The report was launched by Koushik Bhattacharyya, Director and Head, Industrials, Avendus Capital. Over the past decade, the economics of the technology used in this sector has improved significantly, and today, EVs make economic sense across multiple use cases, said Bhattacharyya. He added that the inevitability of transition to EVs is accepted by the world; however, the timeline for mass adoption is still a topic for debate. Nevertheless, Avendus believes that the country is moving quickly towards a mobility regime where EVs become mainstream, noted Bhattacharyya.

The report is broadly divided into two parts, with the first dealing with the technical aspect of understanding EVs, from fundamental differences versus ICE to key components, and a deep dive into battery technology, along with analysis of key global markets. The second part of the report maps the EV opportunity in the Indian context and presents the current state of the industry, including an elaborate total cost of ownership analysis and EV penetration rates for different use cases.


Avendus said there are four drivers of EV adoption in India. They are Policy, Battery Cost, Charging Infrastructure and Supply Chain Localisation.

Policy: The report showed that policy support through subsidies alone might not be the most effect manner for the large-scale adoption of EVs. It added that a mandated policy guideline that is in line with the projected EV economic parity can fast-track adoption significantly.

Battery Cost: The single largest constraint for the economic parity of EVs is the battery cost, which prevents large-scale adoption. There will certainly be a decline in battery prices, but slower decline will affect adoption rates, especially in the four-wheeler category, the report showed.

Charging Infrastructure: The retail adoption of EVs, especially in the four-wheeler segment, can be accelerated by good public charging infrastructure. The report said that the chicken and egg situation of charging infrastructure and EV adoption will need an initial push from the Government.

Supply Chain Localisation: The present situation of EVs is that there is a high dependence on the import of key components. Critical components like battery packs, motors, controllers and key electronics need to get localised for the growth of local players in the EV supply chain.


The report showed that the current COVID-19 environment is expected to drive the rate of adoption of EVs further in the medium term. This uptake will be substantiated by the need for affordable personal mobility, growth of online delivery, cost optimisation by businesses, clear mobility aspirations, comfort and ease of driving and value-driven purchasing. Therefore, the pandemic is expected to accelerate the EV shift in the longer term.


The report detailed that two and three-wheelers will lead the electrification movement in India in the medium term, with expected penetration of 9 % by FY25 in the two-wheeler segment. While the e-rickshaw segment has also emerged as a large market in India in a very short time frame, a large part of this market is still unorganised and based on Lead Acid batteries. However, this market is expected to rapidly shift to Li-ion and by FY25, with 40 % expected to be Li-ion based, Avendus shared.

Meanwhile, e-auto are said to make economic sense on a total cost of ownership (TCO) basis, with an expectation of about 20% EV penetration by FY25. In the medium term, Avendus expects the EV adoption in the four-wheeler category to stay limited to commercial/ fleet applications. The overall penetration in the electric four-wheeler segment is expected to be around 2 %.

On the commercial vehicle side, electric buses are expected to lead the category, with regulatory push being the primary driver, rather than TCO. The report expects EV adoption in the bus category to be at about 13 % by FY25. In addition, Light Commercial Vehicles (under 3.5 T) in the EV category also make TCO sense and is forecast with an adoption rate of about 4 % in the medium term to FY25.


With various factors driving the EV market in India ahead, battery cost is deemed to be one of the most important of these. The company said that the possible factors that could drive down battery cost are the introduction of new chemistries that result in reduced material usage, as well as reducing manufacturing cost. However, Avendus said that manufacturing costs can be driven down only with the manufacture of batteries at a large scale, leading to economies of scale.