India's EV adoption hindered by high price gap

The price difference between electric vehicles (EVs) and internal combustion engine (ICE) vehicles is slowing the growth of EV adoption in India. Despite a rise in interest for eco-friendly cars, the high prices are a barrier for many potential buyers. Currently, the average price of an electric car is ₹17.89 lakh, while petrol and diesel vehicles average ₹12.77 lakh. This 40% gap discourages buyers and contributes to the low market share of electric passenger vehicles, which stands at just 2.62%. At a recent expo, Transport Minister Nitin Gadkari promised that EV prices would become competitive with ICE vehicles in about six months. The high cost of lithium-ion batteries, which are essential for EVs, is a main reason for the price difference. Most of these batteries are imported, facing high duties due to limited local production. In contrast, China dominates the global EV market with over 60% share. In 2024, it sold 6.3 million electric cars, a 27.5% increase from the previous year. Meanwhile, India sold 113,530 EVs in 2024, an 18.4% rise, but with a smaller price drop of 3.3%. Though India’s rate of price decrease lags behind China, the number of battery electric vehicle models available has nearly doubled from 19 in 2022 to 36 in 2024. This growth gives consumers more choices at various price levels. Tata Motors leads in India’s EV market but faces more competition as new players enter. This competition is expected to drive innovation and lower prices. A leading car company stated plans to invest in local battery production to reduce costs by 15-20% over the next two years. As production scales up and EV sales increase, prices are likely to fall further, benefiting consumers in the long run.