Indian EV Industry in 2025: Innovations, Growth, and What’s Next!
The Indian electric vehicle (EV) industry has been on a rollercoaster ride in recent years. While 2024 saw a dip in funding and a slowdown in sales growth, the sector remains optimistic about 2025. With advancements in technology, expanding infrastructure, and supportive government policies, industry leaders believe the coming year will be pivotal for the EV revolution in India.
Here’s a detailed look at what the Indian EV sector expects from 2025, based on insights from industry experts and key trends shaping the market.
Contents
2024 in Review: Challenges and Opportunities
Funding Decline
The Indian EV industry experienced a funding dip in 2024, with investments dropping to $586 million, down from $808 million in 2023. Despite this, the number of deals remained steady at 44, indicating sustained investor interest in the sector.
Sales Growth Slows
EV sales in 2024 grew to 1.9 million units, a 24.5% increase from 2023’s 1.5 million units. However, this growth was slower compared to the 50% surge seen between 2022 and 2023.
Policy Shifts
The introduction of the PM E-Drive Scheme, which replaces the FAME-II program, brought changes to subsidies. For electric two-wheelers, subsidies are now based on battery power, with a fixed rate of ₹5,000 per kWh, capped at ₹10,000.
Despite these challenges, the industry is optimistic about 2025, with expectations of innovation, collaboration, and growth across various segments.
What the EV Industry Expects in 2025
1. Advancements in Battery Technology
Battery technology will be a key driver of EV adoption in 2025. Industry leaders like Deepak Pahwa, Chairman of Pahwa Group, emphasize the importance of Li-ion and solid-state batteries in overcoming challenges like range anxiety. These advancements will not only improve vehicle performance but also reduce costs, making EVs more accessible to consumers.
2. Expanding Charging Infrastructure
The expansion of charging networks is critical for the EV sector’s growth. Nitin Kapoor, MD of SAERA Electric Auto Ltd, highlights the need for robust infrastructure to support the increasing demand for electric three-wheelers and cargo vehicles. Government initiatives and private investments are expected to accelerate the development of charging stations across urban and rural areas.
3. Rise of Green Finance
Green finance is set to play a significant role in making EVs more affordable. Nehal Gupta, Founder of AMU, notes that digital financing platforms and battery analytics will enhance accessibility, especially in tier-2 and tier-3 cities. With a projected 30% CAGR for green finance in 2025, more consumers will be able to switch to electric vehicles.
4. Growth in Logistics and Last-Mile Delivery
The logistics sector is expected to drive EV adoption in 2025. Ajay Rao, CEO of Emiza, predicts that advancements in battery technology and AI-driven route optimization will make EVs the preferred choice for last-mile delivery. Companies like Amazon and Flipkart are already transitioning their fleets to EVs, leveraging policy support and infrastructure improvements.
5. Cybersecurity in EVs
As EVs become more connected, cybersecurity will be a growing concern. Neehar Pathare, CEO of 63SATS, highlights the need for standards like UNECE WP.29 and government-mandated Cyber Security and Management Systems (CSMS) to address vulnerabilities in chargers, autonomous systems, and connected technologies.
6. Emerging Business Models
Innovative business models like Vehicle-as-a-Service (VaaS) and Battery-as-a-Service (BaaS) gained traction in 2024 and are expected to grow further in 2025. Ashish Bagadia, Corporate Finance Partner at BDO India, notes that these models will attract traditional investors, focusing on proven concepts with larger investments.
Key Trends to Watch in 2025
1. Electric Two-Wheelers Leading the Charge
India’s electric two-wheeler market has seen exponential growth, with sales rising from 45,000 units in FY 2021 to nearly 950,000 units in FY 2024. By 2025, this segment is expected to redefine mobility, driven by consumer demand and rapid advancements in charging infrastructure.
2. Quick Commerce and EVs
The rise of quick commerce is expected to boost EV adoption further. According to Samarth Kholkar, CEO of BLive, quick commerce is projected to grow 15-fold by 2025, with electric two-wheelers playing a central role in last-mile delivery.
3. Focus on Sustainability
Sustainability will remain a top priority for the EV sector. Companies are increasingly focusing on battery recycling and EV resale markets, ensuring a circular economy that minimizes waste and maximizes resource efficiency.
Government Support: A Catalyst for Growth
Strong government policies will continue to drive the EV sector’s growth in 2025. From subsidies under the PM E-Drive Scheme to investments in charging infrastructure, the government’s support is crucial for achieving India’s net-zero emissions goal by 2070.
A Promising Year Ahead
Despite the challenges faced in 2024, the Indian EV sector is poised for a transformative year in 2025. With advancements in technology, innovative business models, and strong government support, the industry is set to make electric vehicles more accessible, affordable, and sustainable.
As industry leaders collaborate to overcome challenges and drive innovation, 2025 could mark a turning point for India’s EV revolution. Whether it’s advancements in battery technology, the rise of green finance, or the growth of last-mile delivery, the future of electric mobility in India looks brighter than ever.
