As India’s electric vehicle sales double to 2% of the market, global players face downturns, with Tesla shares down 15% and EU car sales dropping 11.3%.
The demand for electric vehicles in India is on the rise when the demand for those in the global market is stagnating. India’s total electric vehicle sales crossed 1.7 million units in the fiscal year 2024, as stated in the report by JMK Research & Analytics. The automobile industry in India is growing vigorously at the rate of 10% YoY basis the year 2023 for the sales of passenger vehicles, and sales of EVs doubled during this period now occupying 2% of the total passenger vehicle sales. The chief players in India include Tata Motors, Mahindra & Mahindra (M&M), and BYD. Tata Motors has continued to be the market leader in the EV space, controlling more than two-thirds of the market share in 2023. However, competition is growing as India’s Mahindra & Mahindra saw a 2,476% increase, followed by BYD and MG Motor, as per the report by Counterpoint. Electric car maker Tesla has initiated the production of right-handed driving cars for export to the Indian market later this year. Also, VinFast, a Vietnamese-based automobile manufacturer is looking to construct a manufacturing unit in Tamil Nadu, which makes India a central node of the global EV network. Ola Electric Mobility has been a stupendous success story in the EV space, and its shares have skyrocketed 80% over their offer price to lift its market value above $7 billion.
Though the market is growing at a faster pace in India, the global electro-mobility industry is in the midst of challenges. Tesla’s shares were 15% down in 2023 from what it was in 2021- 2022 while BYD shares dropped by 15%. The overall market capitalization of pure-play EV makers fell by almost 20% in comparison with the equivalent figure for 2022 to account for additional financial troubles in the segment. Additionally, most emerging EV players like Volkswagen AG are planning to shut factories in Germany for the first time in 87 years since it was established, which highlights the significant problems facing Europe’s EV industry. As reported by the European Automobile Manufacturers’ Association ACEA, new car sales across the EU dropped in the past year by 11.3% to 134,397 units in March 2024, mainly due to a 29% drop in the area’s largest market, Germany.
The U.S. remains an early-stage market, though development is decelerating. A report from Kelley Blue Book indicated that sales of new electric vehicles topped 200,000 in Q1 2024. In Q1, EV sales accounted for 7.3 % of all new car sales, down from Q4 2023. While the annual sales are increasing consistently, there is a clear indication that the growth rate has slowed, with a decrease in sales by 15.2% in Q4 2023 and a slight improvement from the previous year, expanding by only 2.6% in Q1 2024.
Furthermore, the hybrid electric vehicles (HEVs) and plug-in hybrids (PHEVs) are even more competitive than anticipated, especially for countries like the U.S. where its popularity outperforms the EVs. HEVs are becoming popular due to their faster payback times, and viability in used car markets; the benefits in HP performance offer an appealing option to BEVs. Experts expect the HEVs market to grow further due to manufacturers’ transition towards carbon neutrality and state that manufacturers with solid balance sheets and multiple powertrain strategies are likely to perform better.
The global EV market also depends on China to a great extent. China controls a huge excess of production capacity and has cheaper products because of the vertically integrated electric vehicle supply chain and is exporting EVs to strategic locations like the Southeast Asia region. Nonetheless, constraints with the U. S., Europe, and India are problems that undermine the Chinese EV makers from quickly establishing a solid market in these areas.
While the global demand for new EVs has stabilized, evidence of India’s burgeoning EV market backed by favorable policies and increasing charging points infrastructure show that the country can continue to grow in the EV space, despite a slowing global market. According to research firm Counterpoint Research, EV’s market share in India will increase by 66 per cent in 2024 and is projected to double from 2% to 4%. They are projected to account for one-third of the passenger vehicle sales by 2030. This rapid growth is backed up by incentives such as subsidies and tax credits, and government investments in charging infrastructure. Analysts suggest that investors should target firms with multiple powertrain strategies, including hybrids because short-term goals complement long-term electric vehicle visions.
