NITI Aayog Gives EV Reality Check: India Faces Uphill Battle to Hit 30% EV Target

India has a target of 30% EV penetration by 2030. However, Niti Aayog’s recent report titled “Unlocking a USD 200 Billion Opportunity: Electric Vehicles in India” gives a harsh reality check to the country’s ambitious electric vehicle transition. 

Despite spending over INR 40,000 crores on incentives over the past decade, the report notes, India has achieved only 7.6 percent EV penetration in 2024, which is far below the global average of 16.5 percent and well short of its 30 percent by 2030 target.

The Scale of the Challenge

The numbers paint a concerning picture. For one, India took nearly 10 years to reach merely 7.6 percent penetration. This translates to now needing to add over 22 percentage points in just five years - a four-fold acceleration of its current pace.

"This calls for measures to give a stronger push to the transition," states the NITI Aayog report.

EV sales in India reached 2.08 million units in 2024, growing from just 50,000 in 2016. While this represents significant growth, it pales against global EV sales of 18.78 million units in the same year. 

India's share of global EV stock stands at merely 9 percent, despite being the world's fourth-largest automobile market.

Where India Excels and Fails

The country shows mixed performance across vehicle categories. India leads globally in electric three-wheelers and competes well in two-wheelers, matching markets like China and Europe. However, critical segments remain severely underperforming.

Electric trucks present the starkest failure. Out of 834,578 trucks sold in India in 2024, only 6,220 were electric. More alarmingly, just 280 were long-haul trucks above 3.5-tonne capacity – the vehicles that contribute 34 percent of CO2 emissions and 53 percent of particulate matter emissions despite being only 3 percent of the vehicle fleet.

This represents a significant missed opportunity, as trucks and buses together constitute just 4 percent of the vehicle fleet but contribute to over half of CO2 and PM emissions.

India's over-reliance on incentives has reached its limits. The country operated FAME 1 (INR 895 crores, 2015-2019), FAME 2 (INR 11,500 crores, 2019-2024), and launched PM e-Drive (INR 10,900 crores, 2024-2026). Yet these massive subsidies have yielded disappointing results.

Critical Barriers Identified

NITI Aayog's consultation with industry stakeholders identified four major challenges hindering faster adoption.

Financing Difficulties: Electric buses and trucks cost 2-3 times more than ICE equivalents, making them unaffordable for small operators who comprise 80 percent of truck owners and 94 percent of bus operators.

Charging Infrastructure Paradox: Despite having 14 cars per charging station (better than many countries), India suffers from poor utilisation due to inadequate power connections, high costs, and lack of strategic placement.

Awareness Deficit: Persistent misconceptions about fire safety, battery degradation, and total cost of ownership continue to suppress buyer interest.

Data and Regulatory Gaps: The absence of reliable EV performance data and regulatory inconsistencies hinder evidence-based decision-making.

The Unique Indian Context

India's EV challenge differs fundamentally from developed countries. About 75 percent of Indian vehicles are two-wheelers, compared to just 13 percent cars - the reverse of Western markets. 

Additionally, 98 percent of India's vehicle fleet comprises small vehicles or public transport, with only 2 percent being larger cars costing over INR 10 lakhs.

Most significantly, 80 percent of truck owners operate fleets of fewer than five vehicles, making high-capital EV purchases financially challenging without innovative financing solutions.

Perhaps most importantly, but downplayed consistently is the reluctance of key Indian auto makers to make a shift towards EVs quickly enough. While we have seen how legacy two wheeler players were happy to see startups build the market initially before moving in, in four wheelers and heavy duty trucks and buses, the situation is even more dire. Tata Motors has been the market leader for the past three years simply because others were not as keen, especially the two market leaders Maruti Suzuki and Hyundai. While the former kept pushing for Hybrids over EVs, others have simpky not found the market attractive enough considering potential volumes and the low level of indigenisation. Keep in kind that there is still no full stack battery maker in the country, taking out almost 40% of an EV vehicle cost out of the manufaturer's  established eco-system.  China's vice like grip on materials and tech has also not helped.     

The Path Forward

NITI Aayog recommends a fundamental strategy shift from incentives to mandates. The report suggests focusing on targeted electrification of high-impact, low-volume segments like buses and commercial vehicles, which constitute only 4 percent of the vehicle fleet but contribute to over half of CO2 and PM emissions, offering maximum environmental benefit with relatively less effort. 

Instead of spreading resources thinly across the country, the strategy calls for geographic saturation in 5 pilot cities where 100 percent of buses, a para-transit fleet, and urban freight vehicles can become electric within five years, creating a visible impact that attracts enthusiasm for replication and enables valuable learning from scale operations. 

To address the critical financing barrier, the report proposes pooled financing funds with contributions from public budgets and multilateral development banks to provide lower-interest loans for e-buses and e-trucks, helping small operators who currently cannot afford capital costs significantly higher than ICE equivalents. 

Interestingly, Battery-as-a-Service (BaaS) models are recommended to shift capital costs to operating expenses, as batteries constitute 40 percent of an EV's capital cost, and decoupling them through leasing arrangements would reduce upfront investments while making financing more accessible to the fragmented small operator segment that dominates India's commercial vehicle market.

A Race Against Time

With less than six years remaining to achieve the 30 percent EV by 2030 target, India faces the unenviable task of quadrupling its EV adoption pace while addressing structural barriers that current policies have failed to overcome.

The stakes are high as the success may position India as a global EV leader and significantly reduce its oil import dependence. Failure would mean missing a critical window in the global transition to clean mobility, with lasting implications for energy security and climate commitments. For now, it does look like the 30% target will be met only on the back of two and three wheelers, besides city bus networks in key cities. India also has a huge opportunity to use existing schemes like PM KUSUM to set up dedicated solar plants for EV charging, assuring both plant operators and EV charging operators of decent prices, considering the drop in storage costs that could easily allow for charging beyond solar hours now. In any case, such a move would be way better than the way the 20% ethanol mandate has been rammed down across the board, with very poor communication or attention to long term sustainability.