India overtook China as the biggest 3W EV market in 2023: IEA

India overtook China in 2023 to become the biggest market for electric three-wheelers, with over 580,000 sales, as global sales continue to grow, according to the IEA’s (International Energy Agency) latest annual Global EV Outlook.

The Paris-based global agency appreciated India’s efforts, saying almost a quarter of the country’s three-wheelers are electric.

Globally, the three-wheeler sales grew 13% in 2023 to reach 4.5 million sales, 21% of which were electric, compared to 18% in 2022.

"Almost 1 million electric 3Ws were sold in 2023, reflecting 30% growth compared to 2022. The market is highly concentrated, with China and India together accounting for more than 95% of all-electric and 80% of conventional 3W sales," says the report.

In both India and China, the largest EV markets, lead-acid battery-powered electric 3Ws remain a “widespread” transport technology, it adds.

Also, the IEA thinks the two-wheeler EV industry is gaining ground in India and the ASEAN countries, adding that these growing markets see growing momentum in battery-swapping technologies, especially in India. “India has the largest stock of two-wheelers of any country and represents almost 30% of the global stock of three-wheelers. Electrifying the 2/3W segment will, therefore, be important for decarbonising India’s road transport system.”

Additionally, India, the only emerging market other than China that has a significant share in global VC markets, accounted for 70% of the investments in start-ups developing electric 2/3Ws, according to the report.

“Over the 2018-2023 period, Indian EV start-ups raised USD 2.7 billion, of which over 70% was for electric 2/3Ws. Policy support has contributed to building investor appetite for the EV sector.”

Notably, India’s Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II scheme, which provided subsidies for EVs and funding for EV charging, ended on March 31, 2024.

The government in March 2024 announced a limited scheme from 1 April 2024 and 31 July 2024, which outlays over ₹490 crore to subsidise electric 2/3W purchases. IEA says it could be a “stopgap” until the announcement of a FAME III scheme, expected to detail new subsidy provisions for EVs.

In addition, the government’s PLI scheme for auto and auto components and for manufacturing of advanced chemistry cell battery storage aims to attract investments in domestic EV and battery manufacturing.

Based on the current policy landscape, electric light-duty vehicles represent one in four light-duty vehicles sold in India in 2035, says IEA.

The agency says the investment potential in India’s EV sector is estimated at around USD 200 billion, suggesting there are still "considerable opportunities" ahead for Indian entrepreneurs and start-ups.

Globally, the IEA says despite near-term challenges in some markets, based on today's policy settings, almost 1 in 3 cars on the roads in China by 2030 is set to be electric, and almost 1 in 5 in both the United States and the European Union.

"More than one in five cars sold worldwide this year is expected to be electric, with surging demand projected over the next decade set to remake the global auto industry and significantly reduce oil consumption for road transport," the report adds.

The IEA Outlook, published today, finds that global electric car sales are set to remain robust in 2024, reaching around 17 million by the end of the year. "In the first quarter, sales grew by about 25% compared with the same period in 2023."