From Fast Lane to First Gear: India’s EV Story Hits the Brakes
It’s easy to mistake a spark for a flame.
When India’s EV journey began, the spark was dazzling.
Flashy launches, government subsidies, and ambitious promises that painted a future of silent, emission-free highways.
But building a revolution isn’t like switching on a light.
It’s more like nurturing a fire.
Too much fuel too quickly and it burns out.
Too little and it fizzles.
Today, the slowdown in EV production is that moment of pause — not the end of the fire, but the time to tend to it carefully.
It was all going so fast. Too fast, maybe.
India’s EV story once looked like a highway with no speed limit. Every quarter was a new record, every startup was a unicorn-in-waiting, and traders could barely keep up with the headlines.
But here we are, staring at a dashboard blinking with warning lights: funding drops, sales cool, credit tightens.
The Great Slowdown
Between 2022 and 2024, EV funding fell 27.8%, from USD 808 million to USD 586 million.
Not because people stopped caring, but because subsidies vanished quicker than free Wi-Fi at an airport lounge.
Remember FAME-II’s ₹15,000/kWh push?
The new PM-E Drive scheme cut it to ₹5,000/kWh and kicked four-wheelers and hybrids out of the party.
Cue investor mood swing: less champagne, more spreadsheets. For traders, that means thinner liquidity in EV-linked equities, and short-term punts suddenly feel like skating on thin ice.
Sales still grew - 1.9 million EVs in 2024, up from 1.5 million in 2023.
Sounds great until you remember the 50% growth between 2022 and 2023.
The slowdown’s sharpest in four-wheelers (subsidy withdrawal hurts), while two-wheelers still vroom ahead - 1.13 million units sold in 2024, with Ola Electric and Ather leading the charge.
Traders might want to tilt exposure: scooters still have some zip, but carmakers are grinding gears.
Credit’s another speed breaker.
Bank lending to NBFCs financing EVs fell 0.3% YoY in May 2025 and slid to ₹15.63 lakh crore in FY24 after a breezy 16% rise the year before.
The pinch hurts most in Tier-II and III cities, where underwriting models struggle with informal incomes.
For traders, that’s a red flag over NBFCs and FinTech lenders with big EV books: asset quality could wobble, bond spreads might widen.
Equity valuations may need trimming, too.
Even the big names aren’t immune.
Tata Motors saw an 8.2% YoY drop in passenger vehicle revenue to ₹10,900 crore in Q1 FY26, with EVs only 13% of its portfolio.
Too Pricey to Go Mass
Sub-₹10 lakh models - the usual entry point for EV adoption are stalling, squeezing margins.
For traders, that’s a cue to recalibrate OEM valuations.
Leaner cost control = resilience.
Heavy EV exposure without efficiency = underperformance risk.
And then geopolitics crashes the party.
The US slapped 50% tariffs on Indian exports, including auto components and EV parts—worth about $58 billion in trade.
Rare earth magnets, battery modules…suddenly it’s not just about cars, it’s about trade wars.
Traders need hedges here and companies heavy on US exposure may feel the earnings pinch, while domestic players could ride the import-substitution wave.
The Charging Bottleneck
Infra’s grown fast—18,000 chargers in 15 months, 91% highway coverage.
But half of them don’t function.
Traders should eye infra stocks that can crack interoperability and reliability, not just add glossy charging pins on a map.
When Geopolitics Steps on the Brake
China’s curbs on rare earth magnet exports have already slowed Maruti Suzuki’s much-anticipated e-Vitara SUV.
For traders, that’s a reminder: backward integration and alternative sourcing could decide who stalls and who accelerates.
But here’s the twist—when one lane slows, another opens.
Investors are now eyeing side routes: battery swapping, charging networks, component makers.
These plays come with cleaner economics and fewer subsidy headaches than stretched OEMs.
What’s Next for EVs?
Through it all, the big picture hasn’t budged.
India’s EV market is still projected to grow at a 28.52% CAGR, from USD 5.22 billion in 2024 to USD 18.3 billion by 2029.
The journey isn’t cancelled, it’s just navigating speed bumps.
So maybe this isn’t the end of a boom but the awkward adolescence of an industry.
Not a smooth expressway, but a detour filled with risks worth trading on.
Because if India’s learning to drive EVs, traders are learning to drive the EV market.
Seatbelts recommended!
Sources and References:
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