The electric car or EV industry has been booming in India since the pandemic hit the world. In FY24, the electric car sales went up by a whopping 90% on a YoY basis. This current fiscal, the market is expecting the electric car industry to grow further. In FY25, forecasts suggest that the electric car sales in India to reach 1.3 lakh to 1.5 lakh units.
Why EV industry is expanding?
Consumers are becoming conscious not only of their choices and preferences but about the environment and future sustainable development. This is one of the major factors that is driving the overall EV industry across the globe. It is expected that the next five years will be of electric cars when sales will keep on rising.
In FY24, total number of electric vehicles sold in the year was around 90432 units. In FY25, this electric car volume is expected to rise again and around 1.3 lakh to 1.5 lakh units. Talking about the overall EV market, the sales doubled in FY24 and it is expected to rise around 66% this year.
Overall Growth in Passenger Vehicle Segment
The passenger vehicle (PV) industry itself is expected to grow at a moderate rate in this current fiscal 2025. The overall sales volume of the PV segment can rise around 3% to 5% this year as per reports. Given the 7.4% rise in the PV segment last fiscal that is in 2024, this 3-5% rise is a significant drop in the sales volume of the segment. Experts indicate the slowing demand for passenger vehicles post-COVID, higher interest rates, and increased prices for the declining PV industry growth.
While the sales were high in FY24 in the PV industry the industry has to go through a lot in the previous year. The constantly changing demand of the consumers, geopolitical turmoil, and economic vulnerabilities added up to the woes of the industry but then also it improved significantly its sales figures. The robust demand for newer car models especially from the SUV segment helped the industry grow in FY24 but made it challenging for this year with high-base effect.
Factors To Drive the Industry
- The first and foremost factor to drive the PV industry this year would be interest rates. With the easing inflation, the central bank is expected to cut the rate by the end of this fiscal, which can play a pivotal role in boosting demand for cars.
- Shift towards the greater utility vehicles such as SUVs as the sale of these vehicles surged around 22.4% in FY24. The sale of SUVs can be a major factor driving the growth of the industry. People prefer utility and conformity over other factors when it comes to passenger vehicles.
- The demand for high-end vehicles is expected to boom as per CaeEdge Ratings. The demand for luxury cars and premium models will drive the industry as predicted by the report.
Challenges in the Industry
As said above the demand for premium models and luxury vehicles tends to surge, which is putting adverse pressure on entry-level vehicles. Due to this, the rural sector has to bear the rise in cost of the entry-level vehicles. This is putting negative pressure on the demand for these vehicles.
That said, change is the only constant, and thus the market will eventually align with the changing preferences of the consumers. Though the overall PV industry may be growing slowly in the coming year the electric vehicles are here to drive the sales figures up in FY25.
Source: https://economictimes.indiatimes.com/
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