According to a study by The Economic Times that cited statistics from Venture Intelligence, funding for India’s electric vehicle (EV) sector has drastically decreased, falling from $934 million in 2022 to $586 million in 2024.
Investors are now prioritizing unit economics and profitability before making capital commitments as a result of this drop, which is ascribed to policy changes and slower sales growth. According to the news source, the funding sum indicates a “cautious investment approach,” even as the number of acquisitions in 2024 stayed constant at 44.
Government regulations have always been crucial in determining how the EV industry develops. The FAME-II program was replaced in October by the PM-E drive initiative, which intends to phase away subsidies gradually. Electric two-wheeler incentives under the new policy are limited to Rs 5,000 per kWh for the first year, with a maximum subsidy of Rs 10,000 per vehicle.
On the other hand, FAME-II offered larger incentives of Rs 15,000 per kWh, which covered up to 40% of the cost of a car. In 2023, these incentives were lowered to Rs 10,000 per kWh.
Additionally, the growth rate of EV sales has slowed. Although sales of EVs increased by 24.5 percent to over 1.9 million in 2024 from 1.5 million in 2023, this is a notable deceleration in comparison to the 50 percent growth observed between 2022 and 2023. The electric two-wheeler market, which includes businesses like Ola Electric, accounted for 1.13 million of these sales in 2024, up from 860,000 units in 2023, according to data from the government’s Vahan platform, the report stated.
Despite obstacles, hope is maintained by the Indian government’s goal of 30% EV uptake in new car registrations by 2030. Investors are turning their attention to newer sectors like financing, battery swapping, component manufacturing, and charging infrastructure. These markets are expanding and drawing in new funding.
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