Big targets, bigger snags in EV transition

India’s electric vehicle (EV) transition has gained undeniable momentum. In less than a decade, sales have leapt from barely 50,000 units to over two million annually. The government has set an ambitious target: 30% of all new vehicles sold by 2030 should be electric. Advocates call this a $200 billion economic opportunity, promising cleaner air, lower oil imports, and a thriving green industry.

But bold figures and upbeat targets do not erase stubborn realities. EV adoption remains uneven across segments, financing is patchy, infrastructure rollout lags, and regulatory clarity is still evolving. Unless these hurdles are addressed with urgency, India risks overselling the promise of its electric mobility revolution.

Uneven Gains: Scooters Surge, Trucks Stall

India’s two- and three-wheelers have led the electric charge. Cost-conscious urban commuters and logistics firms have embraced electric scooters and rickshaws, aided by government subsidies and falling battery prices. These vehicles accounted for nearly 90% of all EV sales in 2024, making India the world’s second-largest market for electric two-wheelers after China.

Yet the picture is less rosy for cars, buses, and especially trucks. Electric buses are inching forward, but mostly through government procurement. Cars, hampered by high upfront costs and limited charging options, remain a niche purchase. And electric trucks, despite contributing disproportionately to emissions, are almost absent from the market. Out of more than 800,000 trucks sold in 2024, only a few thousand were electric, most of them lightweight vehicles suited for short-haul urban freight. Long-haul electric trucking — critical for cutting transport emissions — has barely begun.

This imbalance underscores a sobering truth: the segments with the greatest environmental payoff are the ones struggling the most.

The Financing Wall

One reason heavy EVs lag is financing. An electric bus or truck can cost two to three times more than its diesel equivalent. For small fleet operators — who dominate India’s logistics sector — such capital costs are prohibitive. Banks remain reluctant to lend, citing limited performance data, uncertain resale values, and concerns about battery degradation.

Proposals for pooled funds, battery leasing, and vehicle leasing models are promising, but they are still in pilot phases. Without financial innovation at scale, commercial EV adoption will remain stuck. A transition that leaves out buses and trucks cannot deliver on its climate or economic promises.

Charging Ahead — or Not?

The availability of charging infrastructure is the other bottleneck. India now has more chargers than it did a few years ago, but utilisation is low and distribution remains poor. Many stations are underused because they are placed for visibility rather than aligned with real travel patterns.

Resident welfare associations frequently block home charging points in apartments, citing safety fears. Land acquisition for public chargers is slow and costly. Tariff structures vary across states, with public charging often four times more expensive than home charging. Meanwhile, operators struggle with high fixed costs, patchy electricity supply, and regulatory red tape.

It is telling that even as policymakers trumpet thousands of chargers installed, EV drivers still complain about “range anxiety.” Unless India moves from tokenistic distribution to strategic placement — for example, high-density corridors for buses and trucks — charging will remain a weak link.

The Mandate Question

For years, India has relied on subsidies to nudge EV adoption. Purchase incentives under FAME, tax breaks, and reduced registration fees have helped build early momentum. But subsidies alone are unlikely to push the market to 30% penetration by 2030.

That leaves mandates and disincentives. Many countries — from Norway to China — have paired incentives with strict deadlines for phasing out internal combustion engines. India, by contrast, has hesitated. Policymakers worry about backlash from consumers and industry, especially given the country’s price-sensitive market.

Yet without clear signals, the transition may remain half-hearted. Targeted mandates could start with public buses, urban freight fleets, and government vehicles. These are fewer in number, easier to regulate, and offer greater public benefit. If Delhi could mandate CNG buses two decades ago, there is precedent for decisive action.

Batteries and Supply Chains

Behind the consumer-facing issues lies a deeper structural concern: India’s dependence on imported battery materials. Lithium, nickel, and cobalt remain essential to current battery chemistries, but India has little domestic supply. Global prices are volatile, and geopolitical risks loom large.

Research into alternative chemistries, like sodium-ion batteries, offers hope but remains at an early stage. Scaling domestic cell manufacturing is a stated goal, yet most plants are still under construction. Unless India accelerates both R&D and industrial investment, it could find itself merely assembling EVs while relying heavily on foreign inputs — limiting both economic and strategic gains.

The Consumer Gap

Even if supply chains strengthen, consumer hesitation remains a barrier. Many buyers still perceive EVs as risky: concerns about fire safety, range, battery replacement costs, and resale value persist. Misconceptions fester because awareness campaigns are fragmented and often drowned out by more aggressive marketing for conventional vehicles.

Moreover, the economics are not always clear to consumers. While lifetime costs of ownership can be lower for EVs, the high upfront price deters many. For a cost-conscious market, “total cost of ownership” is an abstract concept; the sticker price is what counts. Unless financing models shift upfront burdens into manageable operating costs, adoption will remain slower than targets demand.

From Pilots to Scale

Another challenge is the gap between pilot projects and nationwide rollouts. India has seen innovative schemes — aggregated procurement of e-buses, battery-swapping pilots, and state-level EV policies. Yet too many remain in pilot mode, celebrated in press releases but slow to scale. 

The next five years will determine whether India can move beyond showcase projects to systemic transformation. That means not just new vehicles, but institutional capacity: state-level nodal agencies, coordinated planning between power utilities and transport departments, and reliable regulatory frameworks. Without this, fragmented initiatives may fail to add up to meaningful national progress.

A $200 Billion Opportunity — or Mirage?

The $200 billion figure is attractive, but worth scrutinising. Does it assume rapid penetration across all segments, including heavy vehicles that currently lag far behind? Does it fully account for the costs of building charging networks, upgrading power grids, and subsidising early adoption? And does it factor in the risk that domestic manufacturing may not scale fast enough, leaving much of the value captured overseas?

Optimism has its place, but over-promising risks disillusionment. 

The narrative must shift from celebrating projections to confronting hard trade-offs: how to finance commercial fleets, how to prioritise high-impact vehicle segments, and how to design mandates.

India’s EV story is still being written. To unlock the full promise of electric mobility, India must move from subsidy-driven enthusiasm to mandate-backed certainty, from scattered pilots to scaled ecosystems, from imported reliance to domestic resilience.