India’s electric vehicle sector attracted USD 25.6 billion in investment from 2020 to 2025
India’s electric vehicle journey over the past four years has moved from early adoption to a phase of accelerated scale and policy-backed momentum. Annual EV sales have gone up significantly led by two- and three-wheelers, while cumulative adoption has expanded across segments. This growth has been driven by a combination of factors, starting from policy continuity to demand incentives, forward looking state EV policies, and rising consumer awareness around fuel costs and air quality. This has positioned electric mobility in India as a central pillar of India’s clean transport transition.
Crucially, this expansion has been underpinned by substantial investment flows into the ecosystem. Production-linked incentive (PLI) schemes for batteries and auto components, along with large-scale commitments from domestic and global automakers, have further catalysed capacity creation and localisation efforts. At the same time, capital has increasingly shifted toward higher-value segments such as passenger vehicles and advanced battery technologies.
These investments are beginning to reshape the transition from a demand-driven to a manufacturing-led EV ecosystem. Although gaps remain, the scale of capital deployment signals long-term confidence in India’s EV market. Given the supply chain disruptions owing to the conflict in West Asia, the trajectory now points toward deeper integration of supply chains, reduced import dependence, and the emergence of India as a significant player in the global electric mobility landscape.
India aims to ratchet up the share of EV sales to 30% in private cars, 70% in commercial vehicles, 40% in buses, and 80% in two- and three-wheelers by 2030. The country has made significant strides towards this goal, with overall EV sales rising steadily across segments. But as a recent study by Institute of Energy Economics and Financial Analysis (IEEFA) pointed out adoption has remained “uneven”.
“While E2Ws and E3Ws have gained meaningful traction in absolute sales terms, adoption rates in most segments remained below 10% as of 2025. The industry structure reflects this divergence, with E2Ws and E3Ws (passenger and cargo) dominating the market, followed by electric cars (E4Ws) and buses. Notably, E2W sales crossed the one million mark for the first time in 2024, signalling growing scale and market acceptance in the segment,” it said.
Fig 1: A worker assembles a car at the Vinfast electric vehicle plant in Thoothukudi. Pic Credit : ET
Investments in India’s EV Sector
The IEEFA analysis shows that India’s electric vehicle (EV) sector attracted “~Rs 2.23 lakh crore or USD25.6 billion in investment from 2020 to 2025, or 18% of the estimated total investment needed by 2030.”
“These include investments by vehicle manufacturers (original equipment manufacturers – OEMs), public subsidies and incentives and investments in public charging infrastructure. Investments in OEM manufacturing capacity accounted for the bulk of the investments during this period. However, this figure represents only about 18% of the roughly INR12,50,000 crore (USD143.41 billion) required to meet India’s transport electrification targets by 2030, based on publicly available projections. Mobilising the remaining INR10,26,881 crore (USD117.82 billion) by 2030 presents a significant challenge,” it said.
It points out that EV investment announcements “shifted decisively from three-wheelers to four-wheelers” in 2024 and 2025, driven by surging demand for premium electric cars.
On the other hand, public charging infrastructure investment from 2020 to 2025 amounts to “~9.6% of the Rs 20,600 crore or USD2.36 billion” estimated to be required by 2030. “Commercial EV borrowers face interest rates of 15–33%, which offset the total cost of ownership advantages of EVs. An integrated financing platform—combining credit guarantees, residual value protection, battery-as-a-service, and co-lending—could bring rates closer to 8–12%,” the analysis pointed out.
The analysis found that electric three-wheelers (E3Ws) had the largest share (~78%) of investments among vehicle segments from 2020–2025, mostly owing to the “segment’s maturity and the achievement of commercial-scale operations.” It added that electric two-wheelers (E2Ws, mostly scooters), electric four-wheelers (E4Ws, mostly cars) and electric buses (e-buses) accounted for the remainder.
How Has India Pursued Its Electrification Journey
The government has been handholding the EV sector through its policy continuity and various schemes to scale up adoption. The analysis found that government subsidies under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme and other Union- and state-level policies catalysed adoption by “disbursing Rs 18,251 crore or USD2.09 billion from FY2020–24.”
“While public investments grew during the period, disbursements are below budgeted outlays due to several implementation bottlenecks. Public EV charging grew rapidly (from 5,151 chargers in 2020 to 39,485 in 2025), but remains far below global benchmarks. India’s charger-to-EV ratio significantly lags China, the EU, and the US,” the analysis pointed out.
“Investment in charging infrastructure from 2020–2025 accounted for only 9.6% of the INR20,600 crore (USD2.36 billion) required by 2030. Investment in EV charging faces challenges due to limited investor interest, as public EV charging remains an unproven business model, with many charging stations reporting low usage and high initial costs,” the IEEFA analysis found.
It said an “estimated 82%” of required investments is still pending, arguing that India must attract diverse financing sources to mobilise capital at scale to meet the 2030 electric transport goals. “Bridging the INR10,26,881 crore (USD117.82 billion) EV manufacturing and charging infrastructure investment gap in five years requires moving beyond traditional subsidy-led approaches to systemic derisking mechanisms that unlock private capital at scale,” it said.
About the Author
