Hybrid and Alternative Fuel Vehicles to Outpace EVs in India: UBS Report

A UBS report reveals that hybrid and alternative fuel vehicles will outperform electric vehicles in India over the medium term. Revenue growth in the passenger vehicle industry is expected from FY24 to FY27, driven by SUVs and 125cc two-wheelers, with significant adoption of EVs anticipated by 2030.

Hybrid and alternative fuel vehicles, including CNG options, will outperform electric vehicles (EVs) in India in the medium term, according to a report by investment banking firm UBS. Despite incentives, new launches, and reduced prices, EVs hold less than 2.5 per cent of the passenger car market, lagging behind strong hybrids.

The report predicts India's passenger vehicle industry to achieve high-single to low-double-digit revenue growth from fiscal years 2024 to 2027. Revenue expansion is anticipated due to a 6-7 per cent compound annual growth rate (CAGR) in vehicle volumes and a 3-4 per cent CAGR in average selling prices (ASPs). SUVs are expected to lead demand growth, with entry-level cars unlikely to recover significantly before fiscal year 2026.

For commercial vehicles, recovery is expected from the second half of fiscal year 2025, with projected volume growth rates of 1 per cent, 8 per cent, and 8 per cent for fiscal years 2025, 2026, and 2027, respectively. By 2030, the report estimates that 40 per cent of two-wheelers and 15 per cent of cars sold will be electric, with EVs playing a crucial role in the future of the industry.

(With inputs from agencies.)