After electric two and three-wheelers, the adoption of electric cars and SUVs has been gradually accelerating. These battery-powered vehicles are now being bought by more people in small towns and cities.

In Q1 of this fiscal, electric passenger vehicles (including e-cars and e-SUVs) grew by 154 per cent at about 26,700 units, driven by affordable electric cars, launched recently. This wholesale is the highest-ever number in a quarter so far.

The launch of affordable electric cars, growing charging stations and improvement in awareness levels about the long-term cost benefit of owning an electric vehicle has been driving the adoption of electric cars beyond metros and big cities.

“We see a proliferation of electric vehicles in tier 2, tier 3 cities supported by the charging infrastructure visibility and affordable electric products,” says Kaushik Madhavan, Vice-President and Head of Consulting - Auto Practice, MarketsandMarkets.

In the electric car market, it’s no more the case, like a few years ago when the market either had Reva, which was not really a full-fledged electric vehicle, or high-end products like Hyundai Kona EV. There was nothing in between. This gap has been addressed by passenger vehicle OEMs like Tata, which has now started to offer more affordable electric vehicles aimed at the mass market. 

“I think this has definitely increased confidence among the end users that they have begun to understand that EVs are going to be affordable going forward. Hopefully, with the proposed rollout of electric vehicles by Maruti in the near future, car penetration will definitely increase,” adds Madhavan.

Tata Motors, the market leader in the ePV segment, more than doubled its ePV volumes in Q1 of this fiscal with its total volumes touching 19,000 units, the highest-ever quarterly number for the company. Tiago.ev is becoming a major volume driver for the company with about half of its sales coming from other than the top 20 cities. French car maker Citroen has also seen good acceptance for its electric hatchback e-C3, which comes with a range promise of more than 300 km.

“The EV ecosystem is on a path of rapid growth currently and the charging infrastructure is in-sync with this growth. In non-metro locations, we see the demand strongly driven by word-of-mouth promotion, amongst other factors. As more people realise the benefits an EV brings to the table like the ease of driving and reduced overall cost of ownership, they are encouraged to explore and make a purchase decision towards an EV, says Vivek Srivatsa, Head of Marketing, Sales and Service Strategy, Tata Passenger Electric Mobility.

Since the SUV market, in particular, the compact SUV segment is booming in India, the OEMs are very keen on leveraging the electrification trend there as well. While Tata is the first mover with its Nexon EV, Mahindra has also launched the electric SUV XUV400, for which the company carries an order book of more than 20,000 units. 

Kumar Rakesh, Analyst - IT & Auto, BNP Paribas India also states that there is an increasing number of EV models on offer and some of them are now available at affordable prices. Also, consumer awareness of TCO (total cost of ownership) and early adopters of new technology are also driving demand.

However, charging infrastructure remains a bottleneck for adoption than a catalyst though it is definitely improving, he adds. 

Currently, India has over 6,500 public chargers for EV owners and this number is on the rise. To address the challenges faced by EV owners in metros and big cities, Tata Power has installed over 1,200 community chargers in over 175 residential societies for charging convenience.

Meanwhile, OEMs are also experimenting with new business models as well as ownership proposals such as battery as a service or vehicle as a service or pay-as-you-use models. So, it is going to be very, very interesting to see how the OEMs are going to start positioning the electric vehicles. So, there will be not just an outright purchase model, but also other options. 

The financial institutions are also realising the value of electrification, and they are also beginning to offer financing solutions. 

Presently, Kerala is the leader among Indian states in e-car adoption with a penetration level at about 6.4 per cent, followed by Delhi (3.1 per cent), Karnataka (3 per cent), Maharashtra (2.5 per cent) and Tamil Nadu (2.3 per cent).

“With more new model launches lined up in the coming quarters, we believe e-car penetration will continue to inch up with inflection happening in the year 2025,” says Rakesh.

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