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The Indian electric vehicle (EV) sector would continue to face regulatory, technology and market headwinds in 2024, said industry officials.

As to the tailwinds that would push the sector forward, the officials said growing popularity, reducing battery prices which in turn would reduce the price gap between oil-powered vehicles and EVs.

The industry is also taking note of the traditional two-wheeler makers like TVS Motor and Bajaj Auto gaining market share against the pure play EV players.

The year 2024 may also see the US-based Tesla promoted by Elon Musk setting up base in India and India’s own EV two-wheeler maker Ola Electric hitting the markets with its initial public offering.

“The EV sector in India is poised for growth, but it faces several headwinds in the regulatory, technology, and market domains. On the regulatory front, the lack of a cohesive and standardised policy framework poses challenges for manufacturers and investors, hindering the sector's rapid expansion. Additionally, the absence of robust charging infrastructure further complicates widespread EV adoption,” Ayush Lohia, CEO, Lohia Auto Industries Ltd told IANS.

According to him, technologically, advancements are crucial for enhancing battery efficiency and reducing costs.

“The EV sector in India must contend with the evolving global landscape to stay competitive. Market challenges include consumer hesitancy due to high upfront costs, limited model options, and concerns about charging infrastructure availability. Addressing these multifaceted challenges necessitates collaborative efforts from the government, industry stakeholders, and innovators to create an enabling environment for sustainable EV growth in the Indian market,” Lohia said.

Industry officials also cite the uncertainty about government subsidies/incentives.

The Indian government plans to scrap the financial incentives under its Faster Adoption and Manufacturing of Electric Vehicles in India (FAME II) scheme.

“For example, the FAME 2 subsidies and benefits are not consistent and the government still has to come out with a stable policy so that the manufacturers and all these stakeholders of the EV segment can formulate their business plans accordingly,” H. S. Bhatia, Managing Director, Kelwon Electronic Pvt Ltd, manufacturing and marketing partner, DAEWOO India.

Under the technological framework we need more battery charging infrastructure and a lot are still working on the battery per se because lithium is not the only battery in this category. A lot of people are working on hydrogen, aluminium or nickel cadmium batteries so there is a lot of work still going on, he said.

At the marketplace, Bhatia said public sector banks are not financing the EV sector and only the private lenders/finance companies are financing which leads to limited financing options for consumers.

As to the tailwinds for the sector next year Lohia said a surge in investments by both domestic and international automakers in the development of EV infrastructure and manufacturing facilities is accelerating the adoption of electric vehicles.

“The declining cost of EV batteries and the introduction of incentives and subsidies further sweeten the deal for potential buyers. As charging infrastructure continues to expand and technology advances, the stage is set for a substantial increase in EV penetration, making India a key player in the global electric mobility landscape,” he added.

As regards the subsidies, there are views that the crutches should be removed so that the industry can progress further.

“I hope that 2024 is the year that EVs can come out of being a subsidy driven industry. It’s about time – the crutches have to come off. Supply chain localisation has been successfully achieved by many companies,” Anirudh Ravi Narayanan, CEO of BNC Motors Pvt Ltd told IANS.

“Companies have to be under pressure to reduce costs to survive if we hope to win against Chinese and other products in the global market,” Narayanan added.

“While initial incentives are crucial to jumpstart adoption, the long-term sustainability of EVs will depend on advancements in technology, infrastructure development, and economies of scale. In India, the withdrawal of subsidies on two-wheelers might initially pose challenges for affordability,” Lohia said.

However, as battery costs decrease and manufacturing efficiency improves, the dependency on subsidies is expected to diminish.

Government policies, including incentives for charging infrastructure and research and development, will play a pivotal role in shaping the future of EV adoption. The focus should shift towards creating an ecosystem that fosters innovation and ensures competitive pricing, paving the way for a self-sustaining EV market in India and globally, Lohia added.

Be that as it may, at the market place traditional two-wheeler makers TVS Motor and Bajaj Auto are slowly gaining market share with their EVs given their wide distribution sales and after sales network.

Alive to this, the pure play EV players are not largely perturbed and insist that advanced technological products will offset their network disadvantage.

“In this dynamic industry, a balance between innovation and customer-centric services is essential, and we are committed to navigating this equilibrium to ensure the sustained growth of Lohia Auto in the evolving market landscape,” Lohia said.

Added Bhatia: “Youngsters are focusing more on technology. They want better technology at an affordable price. So if any new manufacturers are giving better technology at more affordable prices then young segments are more willing to go with them, therefore it is an open field for everyone.”