India’s EV Ambitions Will Meet Hard Reality Heading into 2026
India entered 2025 with high hopes for electric vehicles (EVs). Sales were rising, global brands were lining up to enter the market, and investments in charging infrastructure were picking up pace. On paper, the momentum looked strong. However, as the year unfolded, it became clear that India’s EV transition is far more complex than headline numbers suggest.
While electric mobility continues to grow, 2025 exposed the gap between ambitious policy targets and real-world market behavior. Changes in taxation, rising price sensitivity, the renewed appeal of hybrids, and uneven infrastructure development have slowed momentum. As India heads into 2026, the big question is whether EV adoption can move beyond early adopters and niche urban buyers into the mass market.
This blog takes a detailed look at how India’s EV journey evolved in 2025, the challenges holding it back, and what the coming years may hold.
A Year That Promised Much, But Delivered Mixed Results
At the start of 2025, expectations were high. Electric vehicle sales were at record levels, several international automakers announced India plans, and both public and private players committed funds toward charging infrastructure.
However, policy shifts played a major role in reshaping consumer behavior. Cuts in GST on internal-combustion engine (ICE) vehicles made petrol and diesel cars more attractive again. As a result, many buyers postponed or dropped plans to switch to EVs. This was particularly visible during the festive season, when ICE vehicle sales surged while EVs struggled to keep pace despite discounts.
The year made one thing clear: EV adoption in India is far more price-sensitive than policymakers and manufacturers expected.
Targets vs Reality: A Growing Disconnect
India’s long-term EV ambitions remain bold. According to Niti Aayog’s roadmap, by 2030:
- 30% of private car sales should be electric
- 80% of two-wheelers and three-wheelers should be electric
But industry projections paint a more conservative picture. Analysis by the International Council on Clean Transportation (ICCT) suggests that based on current automaker plans, EVs may account for only about 20% of fleet-average sales by 2030.
Even more concerning is the impact of regulatory frameworks. The draft Corporate Average Fuel Efficiency-III (CAFE-III) norms, which are close to being finalized, are estimated to result in just 10–11% EV sales by the end of the decade.
According to ICCT India Managing Director Amit Bhatt, “The draft CAFE-3 norms need a much stronger focus on electric vehicles if India is to reach its 30% electrification target by 2030.”
This highlights a growing disconnect between government ambition and industry direction.
Passenger EVs: Growth Continues, But Challenges Persist
Despite these hurdles, electric passenger vehicle sales continued to rise in 2025.
Between April and November FY26, retail EV volumes reached 118,000 units, already surpassing the total sales of FY25 at 107,000 units. EV penetration in passenger vehicles increased to 3.8%, up from 1.9% a year earlier.
Market Structure and Competition
The electric car market is becoming more competitive:
- Mid-size electric SUVs dominate, accounting for about 60% of sales
- Entry-level electric SUVs make up around 19%
- Tata Motors remains the market leader
- JSW MG Motor India and Mahindra & Mahindra have rapidly expanded their EV portfolios
This intensifying competition has helped expand consumer choice, but it has not yet translated into mass adoption.
Regional Leaders Driving EV Adoption
India’s EV adoption remains uneven across states.
- Kerala leads the country with EV penetration of 8.4%, supported by high consumer awareness and a relatively mature ecosystem
- Other states driving adoption include Delhi, Maharashtra, Karnataka, Tamil Nadu, Odisha, and West Bengal, each with penetration above 4%
Urban demand, better infrastructure, and supportive state policies have played a key role in these regions. However, large parts of the country still lag behind, limiting national-scale momentum.
Global Brands Enter, But Scale Remains Elusive
After years of dominance by domestic, Japanese, and South Korean automakers in ICE vehicles, India’s EV market began to broaden in 2025.
New global entrants included:
- Tesla from the US
- VinFast from Vietnam
While their launches generated significant interest, meaningful sales traction is expected only in 2026, once pricing, localization, and infrastructure strategies become clearer.
GST Cuts and the Revival of ICE Vehicles
One of the biggest setbacks for EVs in 2025 was the GST cut on internal-combustion vehicles. This policy shift had an immediate impact.
During October, which includes major festivals such as Dussehra and Diwali:
- ICE vehicle sales surged due to tax benefits and festive demand
- EVs failed to generate similar momentum, despite heavy discounts
This clearly showed that when affordability improves for conventional vehicles, EV demand weakens sharply.
The Rise of Hybrids: A Divided Industry
As EV adoption slowed, hybrid vehicles gained popularity. Many consumers now see hybrids as a safer and more affordable transition technology.
Industry opinion remains sharply divided:
- Maruti Suzuki and Toyota Kirloskar continue to strongly back hybrids
- Hyundai and Mahindra & Mahindra, earlier hesitant, are now warming to hybrids
- Tata Motors remains cautious, stating it does not support government incentives for hybrids
According to Amit Bhatt, “There is no rationale in pivoting to interim technologies like hybrids when electric vehicles are the stated end goal.”
Despite this view, hybrids are increasingly shaping near-term market dynamics.
Tata Motors and the Next Wave of EVs
Tata Motors, India’s EV pioneer, continues to double down on electric mobility.
The company confirmed plans to:
- Launch the Sierra EV and an updated Punch EV in the first half of FY26
- Enter the premium EV segment under the Avinya brand by end-2026
- Introduce three more EV nameplates by FY2030
These moves signal long-term commitment, even as near-term demand fluctuates.
Investments Signal a Structural Shift
Despite sales volatility, automaker investments suggest that India’s shift toward electric mobility is structural, not temporary.
According to Deloitte:
- Around 80% of automaker capital expenditure over the next three years will be directed toward EV expansion
Battery Manufacturing and Giga factories
India’s battery ecosystem is also evolving rapidly:
- Multiple giga factories are expected to come online by 2026
- Total battery manufacturing capacity could reach 100 GWh, up from 60 GWh today
Indian conglomerates are partnering with global players, while foreign OEMs are pursuing backward integration with local battery manufacturers.
Building the EV Ecosystem Beyond Vehicles
Automakers are increasingly realizing that EV success depends on the ecosystem, not just the product.
- Tata Motors has leveraged the Tata UniEVerse, including Tata Power, Tata Chemicals, TCS, and Tata AutoComp
- Rivals such as Maruti Suzuki, Hyundai, and VinFast are investing in battery localization, charging networks, and resale support
These efforts aim to address key consumer concerns such as charging access, financing, and long-term ownership costs.
Used EVs, Resale Value, and Insurance Concerns
As early EV adopters begin upgrading, resale value has emerged as a major concern.
- JSW MG Motor and Maruti Suzuki have announced buyback schemes
- However, many early buyers remain exposed due to the lack of a mature used-EV market
Insurance and Repair Costs
Insurance data highlights additional challenges:
- Petrol and diesel vehicles account for 93% of total motor insurance claims
- EVs make up just 1% of claim volume, but have the highest claim frequency (29%)
- Average EV repair costs are significantly higher due to battery and electronics damage
These factors add to consumer hesitation, especially for first-time EV buyers.
Charging Infrastructure: Progress, But Gaps Remain
As of August 2025, India had 29,277 public EV charging stations. While this marks steady progress, ground-level issues persist.
Many consumers report:
- Non-functional charging points, especially those installed by oil marketing companies
- Lack of chargers in residential societies due to unclear guidelines and safety concerns
Without reliable and accessible charging, range anxiety continues to limit adoption, particularly outside major cities.
Lessons from Global Markets
India’s EV journey contrasts sharply with some global peers.
- China used sustained policy support to reshape domestic demand before expanding globally
- Norway accelerated adoption by heavily taxing ICE vehicles
- London’s ZEV framework shows how regulation can force demand shifts
In contrast, the US and EU are increasingly leaning on hybrids as EV growth slows.
Globally, battery economics are improving:
- Lithium-ion battery prices fell 8% since 2024, reaching a record low of $108 per kWh
- Cheaper lithium iron phosphate batteries and excess manufacturing capacity drove this decline
Over time, these trends could improve EV affordability in India.
Electric Two-Wheelers: Growth with Limits
Electric two-wheelers remain one of the fastest-growing EV segments:
- 16.4% year-on-year growth in the first half of FY26
- National EV penetration among two-wheelers reached 6.3%
State-Level Leaders
- Kerala leads with 13.9% penetration during April–October FY26
- Karnataka follows at 12.5%, backed by strong urban demand
Despite this, month-on-month growth stalled through much of the year.
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Why Two-Wheeler EVs Remain Urban-Centric
The electric two-wheeler market is heavily skewed:
- Scooters account for 98.5% of sales
- Electric motorcycles make up less than 2%
This limits rural adoption, where motorcycles are preferred for long distances and rough roads.
According to Deloitte’s Rajat Mahajan, electric motorcycles have strong potential in a motorcycle-driven country like India, but limited range and charging infrastructure are holding them back.
New Entrants Set to Disrupt the Segment
The electric motorcycle segment is set to change:
- Royal Enfield plans to launch its Flying Flea electric series by end-FY26
- India Yamaha Motor will introduce battery-powered models after network readiness
Currently, the segment is dominated by startups such as Revolt, Ultraviolette, Oben Electric, Matter, and River.
Outlook for FY2026 and Beyond
Estimates for FY2026 suggest:
- EV penetration of 4–5% in passenger vehicles
- 6–7% penetration in two-wheelers
However, several challenges remain:
- Supply constraints for rare-earth magnets and battery materials
- Regulatory uncertainty and lack of cohesive long-term state policies
- Limited awareness around EV safety and battery recycling
- Reluctance of residential societies to install chargers
- Continued reliance on fixed batteries instead of swapping or battery-as-a-service models
Until these issues are addressed, EV adoption is likely to remain uneven and urban-focused.
Conclusion: A Critical Juncture for India’s EV Journey
India’s EV ambitions are not fading, but 2025 made it clear that ambition alone is not enough. Without firm regulation, consistent incentives, reliable infrastructure, and affordability, EV demand will continue to fluctuate.
As India heads into 2026, the country stands at a critical juncture. The next phase will determine whether electric mobility can move beyond early adopters and policy headlines to become a truly mass-market solution.
The reality is clear: India’s EV transition is underway, but the hardest part still lies ahead.
