The future of mobility is electric – will 2025 be the year that accelerates the transition in India? The Indian electric vehicle (EV) market is roughly valued at INR 20 lakh crore, as per the Union Minister Nitin Gadkari, with close to 55 lakh EVs on our roads today. The Minister also announced that by 2030 India’s electric vehicle market could grow to INR 20 trillion, with annual sales reaching 1 crore units, and create five crore jobs! In the next five years we can expect India to become the third largest automobile industry given the increasing demand for electric vehicles. This growth in EVs is driven by rising fuel costs, supportive regulations to meet climate targets, and incentives that are boosting manufacturing and affordability at both national and state levels.
The next five years are crucial for India to meet its EV penetration target of 30% of the market share by 2030. Building on the progress of 2024, 2025 has great potential if the momentum continues. If the India Union Budget 2025-2026 is any indication, the future looks bright for EV. The PM E-Bus Sewa Scheme saw a 160% increase in funding, offering bus subsidies and incentives for Original Equipment Manufacturers (OEMs) to boost manufacturing, particularly in tier-2 and tier-3 cities. This growth is likely to create new manufacturing and job opportunities, fueling the industry’s expansion. Schemes supporting the development of charging infrastructure are also progressing steadily. However, maintaining year-on-year momentum is essential, which will require ongoing government support through robust policies, regulations, and better incentives.
From the rising demand for electric vehicles to a greener public transport, let’s reflect on 2024’s key achievements and explore how 2025 is set to build on these efforts with five electrifying trends you won’t want to miss:
1. Expansion of e-Bus Fleet with Maharashtra Leading the Way
With 9,700 public electric buses (e-bus) on the road as of December 2024, India has witnessed a mixed bag of achievements and challenges in the e-bus sector. While the funding for FAME II stopped, the national PM E-Bus Sewa Scheme gained momentum. The Scheme was launched by the Ministry of Housing and Urban Affairs (MoHUA) in 2023, aiming to deploy 10,000 e-buses across tier-2 and tier-3 cities through a Public-Private Partnership (PPP) model. Of the INR 983 crore sanctioned for 14 states, nearly half—INR 437 crore—was allocated to eight states in 2024, with Maharashtra receiving the largest share of INR 200 crore. 20 cities across Maharashtra will reap its benefits.
Under the same initiative, in September 2024, the PM E-Bus Sewa Payment Security Mechanism (PSM) was approved, with a total outlay of INR 3,435.33 crore. This initiative was designed to support Public Transport Authorities (PTAs) in procuring and operating over 38,000 e-buses between FY 2024-25 and FY 2028-29. The scheme protects bus operators and manufacturers by guaranteeing they will still get paid even if PTAs fail to make their payments on time.
With the scheme approved for 14 states and payment security mechanisms in place, Maharashtra could become a frontrunner in e-bus adoption. In addition, the Maharashtra State Road Transport Corporation (MSRTC) is set to add 5,500 e-buses to its fleet, enhancing connectivity while reducing emissions. In Mumbai, the Brihanmumbai Electric Supply and Transport (BEST) aims to achieve a 100% electric fleet by 2030, demonstrating a strong commitment to clean mobility. Additionally, under the PM E-Drive initiative, Mumbai and Pune are slated to receive over 2,000 e-buses, further strengthening their public transport systems.
While Maharashtra’s efforts to procure e-buses through various central schemes are crucial and should be strategically scaled, a 2024 study by ITDP highlighted that the state severely lacks urban buses. This presents a significant opportunity for Maharashtra to bridge the gap by prioritising sustainable e-buses.
In 2025, the state could see a substantial increase in e-bus procurement, enhancing public transport, reducing pollution, and setting a precedent for other states in India’s e-mobility journey.
2. Gradual Transition of the Private Sector to e-Buses
The transition to electric private sector buses has been slow, but it’s essential. While public buses often get the spotlight, private operators own 93% of India’s 20 lakh buses. By 2030, demand for stage-carriage non-urban buses is projected at 7 lakh and urban buses at 3 lakh. To meet this, both public and private fleets need to grow, and private buses can help bridge the gap.
In 2024, ITDP India worked with cities in Tamil Nadu and private operators to explore the market for electric buses. The preliminary consultants showed that 60% of operators are open to leasing e-buses, provided low-cost financing, charging infrastructure, and policy reforms are in place. If these leasing reforms are implemented, Tamil Nadu could replace 1,500 old diesel buses with e-buses over three years, advancing its sustainable transport goals.
Some progress was made at PRAWAAS 4.0 in 2024. The International Finance Corporation (IFC) showed interest in financing the private sector’s shift to e-mobility, while Sundaram Finance was keen on supporting the leasing model. Additionally, BasiGo, a well-established leasing company in Kenya, expressed interest in leasing e-buses in India, provided there are policy reforms in place.
A private sector demand aggregation workshop in Erode
In 2025, if Tamil Nadu private operators, with the support of the state, successfully implement the leasing model, it could set a precedent for other states to drive private-sector electrification.
3. Surge in EV Production and Tamil Nadu’s Emergence as the Hub
India is going all in on EV manufacturing! Backed by the 2021 Production Linked Incentive (PLI) scheme for the automobile sector (PLI) with a budget of ₹25,938 crore (in 2023), 257 facilities have been approved across 17 states. Maharashtra leads with 77 facilities, followed by Tamil Nadu’s 46, with states like Haryana, Karnataka, and Gujarat also stepping up—showcasing India’s nationwide push for EV production.
Though PLI funds are yet to be disbursed (as of Nov 2024), Tamil Nadu is already a magnet for EV manufacturers, producing 40% of India’s EVs, including two-wheelers, three-wheelers, and cars. In September 2024, Tata Motors launched its Ranipet plant, set to create 5,000 jobs, upskill the local community, and run operations entirely on renewable energy. Vietnamese EV manufacturer VinFast has also announced plans for a USD 2 billion plant in the state. Meanwhile, passenger vehicle manufacturers such as Hyundai (with an investment of INR 20,000 crore) and Stellantis (with INR 2,000 crore) are already laying the groundwork for their expansion in Tamil Nadu.
In 2025, watch out for Tamil Nadu’s rise as India’s leading EV hub, with six cities—Coimbatore, Trichy, Tirunelveli, Madurai, Salem, and Chennai—set to become key centers for EV development. Backed by a skilled workforce, a strong network of suppliers, and a thriving auto manufacturing ecosystem, the state is well-positioned to lead the charge in India’s EV revolution.
4. Expanding Charging Infrastructure to Keep Pace with the Demand
The increasing demand and supply of EVs also necessitates a parallel expansion of charging infrastructure across the country. To maintain an optimal ratio of one charger for every 40 electric vehicles, India will have to install over 4,00,000 charging stations annually, aiming for a cumulative total of 13.2 lakh by 2030, as per the Confederation of Indian Industry (CII).
At the national level, the PM E-Drive initiative also places a strong emphasis on expanding charging infrastructure. With plans to install over 72,300 chargers nationwide, the scheme aims to ensure seamless accessibility for all EV users in urban and rural areas alike. It also focuses on creating a network of chargers in strategic locations, including highways, cities, and transport hubs, facilitating long-distance travel and encouraging EV adoption.
Adding to this momentum, the Ministry of Power’s comprehensive guidelines for battery swapping and charging stations (issued in January 2025) are paving the way for innovative models like “Battery as a Service” (BaaS). By enabling quicker battery replacement options and promoting safety and efficiency standards, these guidelines aim to streamline operations and attract investments in the EV ecosystem.
At the state level, incentives are crucial for developing charging infrastructure. Each state’s Electric Vehicle (EV) policy offers incentives for charging infrastructure, which may include capital subsidies, building regulations, tariff concessions, renewable energy sources, and consumer interface of the EV network. As a result, India currently has 25,202 EV public charging stations, with Karnataka, Maharashtra, and Uttar Pradesh leading the way. Notably, the charging network is expanding rapidly into Tier 2 and 3 cities, seeing a 96% growth in FY24. Interestingly, 59% of the fast-charging points are now located in these cities, with over half positioned near national highways, improving connectivity and enabling long-distance travel. ITDP has been actively supporting states like Tamil Nadu in their efforts to developing roadmaps to implement robust charging infrastructure across the state.
In 2025, India will expand its EV charging infrastructure through government initiatives like PM E-Drive and state-level incentives, encouraging both demand and supply growth. These efforts, along with private sector involvement, are making EV adoption more accessible and advancing sustainable transport across the country.
5. Scaling Up E-Bus Production through Zero- Emission Vehicle (ZEV) Mandates
In 2024, ITDP conducted consultations with OEMs to address the need for scaling up e-bus production in India. A key finding revealed that most manufacturers can currently produce only up to 500 e-buses (per OEM) annually, compared to 15,000–20,000 Internal Combustion Engine (ICE) buses. With the current demand-side incentives and a 32% CAGR for e-bus sales (2021–2023), India is projected to achieve only 15% e-bus sales by 2030, as compared to the target of 40% by 2030. To meet the 2030 e-bus sales target, annual e-bus production and sales need to increase three times, requiring an average of 25,000 e-buses to be produced and sold each year. This highlights significant gaps in the supply chain and the need for regulatory changes to boost production capacity.
India needs a ZEV mandate with a framework that should also include sales targets, incentives, penalties, and monitoring mechanisms for manufacturers. As India moves beyond subsidies, ZEV mandates are crucial for scaling up electrification. They can drive production, ensure accountability, and create a robust pathway to meet the country’s electrification goals. In 2025, adopting ZEV mandates could set the stage for transformative growth in the electric vehicle ecosystem.
As India continues its electrification journey in 2025, the road ahead looks promising, with charging infrastructure, e-bus fleets, and private sector adoption all gearing up for a greener future. Key developments include Maharashtra’s push for e-buses, the nationwide expansion of charging stations, and Tamil Nadu emerging as a hub for EV production. With strong policy support, private sector involvement, and innovations like battery swapping and Zero Emission Vehicle (ZEV) mandates, 2025 is poised to accelerate India’s shift to sustainable electric mobility. Get ready—India’s EV revolution is accelerating fast!
Written by Kashmira Dubash, Senior Programme Manager