India’s EV Sector: OEMs Lead 70% of Deals In 2023, Says Report

India's EV Sector: OEMs Lead 70% of Deals in 2023, Report Finds

According to a report by Bain and Company and Indian Venture and Alternate Capital Association, EV penetration in private equity and venture capital (PE-VC) is projected to rise from 6% in 2023 to 40% by 2030.  The report highlighted that 2023 followed the trend observed in the second half of 2022, with a reduction in activity in Indian PE-VC deals. Activity decreased by 35%, from $62 billion in 2022 to $39 billion in 2023, returning to pre-Covid-19 levels.

According to the report original equipment manufacturers (OEMs) were responsible for driving 70% of the total EV deal value, indicating a significant increase in EV adoption.

PE-VC activity decreased by 35%, from $62 billion in 2022 to reach $39 Bn in 2023, returning to pre-Covid-19 levels.

Anticipating robust deal activity in the EV OEM sector, the report suggested that already-funded assets were seeking capacity expansion while charging infrastructure and battery-swapping companies were looking to expand their geographic footprint and enter new EV segments.

The report estimated that EV penetration had risen from 1% in 2019 and was expected to continue increasing due to investments in electric vehicles PE-VC. Large investments, exceeding $100 million, were projected across various vehicle segments, including companies such as Ola Electric, Ather Energy, Mahindra EV, and TI Clean Mobility.

Moreover, the report noted a 20% annual growth in investments in advanced manufacturing between 2021 and 2023, driven by global supply chain diversification and government incentives. Significant activity was observed in EV OEMs, with several $100 million deals being executed, fueled by the increasing penetration of EVs and the bundling of large deals into companies generating over 70% of sales from exports.

EV Market is expected to see strong deal activity in OEMs and charging infrastructure/battery-swapping

The study emphasized the pivotal role of charging infrastructure and battery-swapping players in driving deal activity, particularly in the electric three-wheeler (E3W) segment. India accounted for 20% of all PE-VC investments in the Asia-Pacific region in 2023, up from 15% in 2018, indicating a rise in capital from both domestic and global/regional funds.

Furthermore, the report attributed the strong growth in the EV sector to the launch of lower-cost offerings, expansion of distribution networks beyond metropolitan areas, improved charging infrastructure, increasing demand from the business-to-business (B2B) segment (including two-wheelers and EV taxis), and government incentives. EV penetration is forecasted to reach 40% by 2030, driven by growing adoption among two-wheeler fleet operators due to the favorable total cost of ownership compared to internal combustion engine vehicles.