India’s EV sector draws ₹2.23 lakh cr investment, faces 80% funding gap: IEEFA

By 2030, India targets EVs sales comprising 30 per cent of all private cars, 70 per cent of commercial vehicles, 40 per cent of buses, and 80 per cent of two-wheelers and three-wheelers.

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India’s electric vehicle sector has attracted investments worth ₹2.23 lakh crore between 2020 and 2025, or 18 per cent of the estimated total of the total ₹12.5 lakh crore investment needed by 2030, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report estimates that nearly ₹12.5 lakh crore will be needed by 2030 to support EV manufacturing and charging infrastructure, leaving an investment gap of more than 80 per cent.

“While ₹2.23 lakh crore is a significant capital mobilisation in just five years, it represents only about 18 per cent of the ₹12.5 lakh crore required by 2030. Mobilising the remaining ₹10,26,881 crore by 2030 will require systemic financing reforms,” said co-author Subham Shrivastava, Climate Finance Analyst at IEEFA.

A breakdown of the investments shows internal accruals accounted for the largest share of realised EV manufacturing investment, followed by debt and equity.

“From 2020–2025, electric three-wheelers attracted the largest share of investments among vehicle segments, due to the segment’s maturity and commercial-scale operations alongside its fragmented OEM base,” said co-author Saurabh Trivedi, Sustainable Finance Specialist at IEEFA.

He, however, added that recent investment announcements in 2024 and 2025 reveal a pivot towards electric four-wheelers, driven by rising demand for electric cars.

The report said that India’s electric transport sector has attracted massive capital inflows over the past five years, but the industry needs a cohesive investment framework to achieve its 2030 goals.

The report points out that commercial EV borrowers face interest rates ranging from 15 per cent to 33 per cent, significantly eroding the total cost of ownership advantages that electric vehicles otherwise offer. High financing costs dampen demand, delay fleet expansion, and ultimately slow manufacturing capacity growth.

It said that publicly available estimates suggest that ₹20,600 crore of investment in charging infrastructure will be required for India to achieve its 2030 goals. Based on calculations of realised investment, the authors estimate that capital deployed from 2020–2025 accounted for only 9.6 per cent of this amount.

IEEFA added that with about 82 per cent of required investments still unmet, the central challenge is no longer policy ambition but the cost and structure of capital.

“The binding constraint is not a lack of capital in the system — it is how EV risk is priced. When lenders remain uncertain about battery performance, residual values, and cash-flow stability, that uncertainty gets reflected in higher interest rates,” said Shrivastava.

IEEFA said that bridging the ₹10.3 lakh crore investment gap over the next five years will therefore require moving beyond traditional subsidy-led approaches toward structural risk-sharing mechanisms that lower the cost of credit and attract private capital.

By 2030, India targets electric vehicle (EV) sales comprising 30 per cent of all private cars, 70 per cent of commercial vehicles, 40 per cent of buses, and 80 per cent of two-wheelers and three-wheelers. Achieving these goals requires substantial investment in EV manufacturing, charging infrastructure, and supportive ecosystems, noted IEEFA.

The report suggests that integrated financing mechanisms such as credit guarantees, residual value protection and battery leasing models could reduce borrowing costs to 8-12 per cent, improving affordability and accelerating adoption.