As electric vehicle (EV) sales falter in the US and Europe faces rising competition from Chinese automakers, India’s electric vehicle market is a rare bright spot, posting strong double-digit growth, albeit on a smaller base, and attracting fresh investments from both global and domestic carmakers.
Industry experts say government incentives, rising adoption, and investments from legacy and new automakers are driving India’s EV growth. Companies are expanding production and model lineups, with some viewing India as a potential global supply hub. Analysts note that this gradual, policy-backed growth could sustain momentum even as subsidies taper.
Japan’s Honda Motor on Thursday announced a $15.7 billion write-down on its EV investments as it shelved most planned models, joining Stellantis, Ford Motor Co., and General Motors in reporting over $60 billion in global EV write-downs, reflecting weak US demand and intensifying competition from Chinese manufacturers.
In contrast, global and domestic automakers in India remain bullish. S. A. and Honda recently highlighted India, the world’s third-largest car market, as central to their EV strategies, citing long-term growth prospects.
Top Indian carmakers, including Maruti Suzuki, Tata Motors PV, Mahindra and Mahindra, and Hyundai Motor India, plan to expand EV lineups and production capacities, anticipating 15-20% penetration over the next four years, aided by central and state government incentives.
“For India, our plans for our First BEV (Prototype named Honda 0 α) remain on track and will be introduced in the second half of FY26-27. We will continue to focus on delivering strong products and value to customers while responding to evolving market opportunities,” a company spokesperson for Honda told Mint in an emailed response.
Honda is also set to invest ₹1,200 crore to produce its first EV at its plant in Rajasthan starting this year.
Last week, French Renault, unveiling its global vehicle strategy, said India is witnessing high growth due to rising electrification and SUV sales. “India will become a global production and supply hub for the brand, serving its domestic market as well as many other countries. Between now and 2030, four new models will be designed and assembled in India, including 100% electric and full hybrid cars.”
India’s EV market ended 2025 with nearly 177,000 unit sales, up 77% from the previous year, according to Federation of Automobile Dealers Associations (FADA) data. EV penetration in the country’s 4.5 million passenger vehicle market rose from 2.4% on year to 4%.
In contrast, EV sales in the US fell 2% to 1.28 million units in 2025, with adoption around 8%, following the withdrawal of favourable tax incentives, according to BloombergNEF data. In Europe, sales grew 17% to 3.65 million units, but Chinese carmakers such as BYD, Leapmotor, and Jaecoo are posing stiff competition, with penetration at 16%.
Against this backdrop, India’s market continues to expand, aided by government incentives, including a ₹25,000 crore Production Linked Incentive (PLI) scheme and a 5% goods and services tax (GST) on EVs, compared with 18-40% on conventional vehicles. State-level incentives include manufacturing support and waivers of road and registration taxes.
An industry executive noted that, together, these measures can provide effective benefits covering 35% to 60% of an EV’s price.
At a Kotak Institutional Equities investor conference in February, Mahindra management said it plans to dedicate 20% of its total manufacturing capacity to EVs by FY2027E, producing roughly 18,000 EVs per month out of a total monthly capacity of 85,000 vehicles.
Tata Motors PV, which leads India’s electric four-wheeler market, said in December 2025 that rapid penetration growth is possible and government targets of 30% electrification can be achieved if top passenger vehicle companies participate.
“One year back, monthly EV industry volumes were around 7,500 units. Today, they are fluctuating between 16,000 and 18,000 units. That is the reference you should take,” Shailesh Chandra, managing director and chief executive at Tata Motors PV, told reporters. He added that EV costs are expected to fall while ICE vehicle prices rise due to tightening regulations.
Maruti Suzuki and Hyundai plan 15-17% EV penetration in their overall sales portfolios by March 2031, while upstarts such as JSW MG Motor and VinFast India have committed about $1 billion toward new models and expanded capacities in India.
Vinay Piparsania, founder of MillenStrat Advisory & Research, an auto-focused consultancy, said Indian automakers appear to be considering a more calibrated approach to EV adoption projections, taking caution from global markets where aggressive targets were often supported by strong policy incentives.
“Timing can work to India’s advantage, as by the time policy advantages begin to fade, declining battery costs and improving technology should bring EVs closer to price parity with vehicles, while performance and features will also have been developed significantly higher. This would support a steadier and more sustainable EV adoption curve in India,” Piparsania said.
Despite the end of subsidies under the PM E-Drive scheme, analysts note that India’s EV market has maintained momentum. “While policy support has moderated following the tapering of subsidies under the FAME II and PM e-Drive scheme, adoption momentum remains intact due to product innovation, localization of components, and strong fleet demand in urban mobility segments,” Shridhar Kallani of Antique Stock Broking wrote in a 13 March note.
