India overtook China in the electric 3W market in 2023: A report by IEA
In a significant development in the global electric vehicle (EV) landscape, India surpassed China to become the world’s largest market for electric three-wheelers in 2023. According to the International Energy Agency’s (IEA) latest annual Global EV Outlook, India recorded sales of over 580,000 electric three-wheelers, marking a substantial milestone in its green transportation initiatives.
The Paris-based IEA acknowledged India’s substantial growth in the EV sector, highlighting that electric models now constitute almost a quarter of all three-wheelers in the nation. This surge is reflective of a broader global trend, where electric three-wheeler sales increased by 13% in 2023, totaling 4.5 million units, with electric models making up 21% of these, up from 18% the previous year.
The report revealed a 30% year-over-year growth in global electric three-wheeler sales, reaching nearly one million units in 2023, with China and India combined accounting for over 95% of the electric and 80% of conventional three-wheeler sales. The popularity of lead-acid battery-powered electric three-wheelers continues to dominate in these markets due to their cost-effectiveness and established infrastructure.
Factors Driving India’s Leadership
Government Policy Support
One of the pivotal factors contributing to India’s success in the electric vehicle (EV) sector has been robust governmental support, particularly through initiatives like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II scheme. This policy provided substantial subsidies for EVs and funding for EV charging infrastructure, which significantly boosted the adoption rates of electric 3Ws in India. Although the FAME II scheme concluded in March 2024, it was immediately followed by a transitional policy that continues to incentivize EV purchases, demonstrating ongoing commitment to electrification.
Investment in Startups and Technology
The investment climate in India has also been exceptionally conducive to the growth of the EV sector. Between 2018 and 2023, Indian EV startups raised USD 2.7 billion, with over 70% directed towards electric 3W development. These investments have not only spurred innovation within the sector but have also cemented India’s position as a significant player in the global venture capital markets for EVs.
Technological Advancements and Market Demand
Technological advancements, such as battery-swapping technologies, have been widely adopted in India, enhancing the practicality and appeal of electric 3Ws. Additionally, India holds the largest stock of two-wheelers globally and a substantial share of the three-wheeler market, providing a vast base for potential electrification and growth.
Future Prospects and Challenges
Looking ahead, the IEA forecasts that electric light-duty vehicles will represent one in four light-duty vehicles sold in India by 2035. This optimistic outlook is supported by India’s Production Linked Incentive (PLI) scheme for auto and auto components and for the manufacture of advanced chemistry cell batteries, which aim to attract further investments in domestic EV and battery manufacturing. The investment potential in India’s EV sector is estimated at around USD 200 billion, suggesting significant opportunities for growth and innovation.
Despite these positive developments, the path forward involves addressing several challenges, including enhancing charging infrastructure, reducing dependency on imported battery technologies, and continuing to evolve policies that support sustainable growth in the EV sector.
Conclusion
India’s rise to become the biggest 3W EV market in 2023 is a testament to its strategic policy implementation, robust investment environment, and technological adaptation. As global demand for electric vehicles continues to surge, India’s approach provides a blueprint for other nations aiming to decarbonize their transport sectors and promote environmental sustainability.