Electric car market share in India crosses 4pc in May amid rising demand and policy push

THEBUSINESSBYTES BUREAU

NEW DELHI, JUNE 7, 2025

India’s electric passenger vehicle (EV) market reached a significant milestone in May 2025, with the segment’s market share surging past the 4 per cent mark for the first time, reflecting the country’s accelerating shift towards sustainable mobility.

According to data released by the Federation of Automobile Dealers Associations (FADA), EVs accounted for 4.01 per cent of all passenger vehicle sales in May, up from 2.6 per cent in the same month last year and a notable increase from 3.5 per cent in April 2025. A total of 12,304 electric cars were sold in May, compared to 8,029 units in May 2024. In April 2025, sales stood at 12,233 units.

“This is an important milestone in our industry’s journey towards electrification,” said FADA CEO Saharsh Damani. “The growth has been driven by advances in battery technology, improved driving range, and more competitive pricing compared to earlier EV models.”

Tata Motors retained its leadership in the EV space with 4,351 units sold in May. JSW MG Motor followed closely, posting a 149 per cent year-on-year growth with 3,765 units sold, while Mahindra & Mahindra took third place with 2,632 units. Together, the top three players accounted for over 87 per cent of total EV sales during the month.

Despite the upward trend, FADA warned of potential headwinds that could temper the momentum. Global supply chain constraints—especially in rare-earth materials essential for EV components—pose risks to production and pricing. China, a dominant supplier of rare earth magnets used in EVs, has recently imposed export restrictions, potentially disrupting supply chains worldwide.

“If the supply situation for rare earth materials doesn’t improve, we could see production slowdowns that may impact retail sales in the near future,” Damani cautioned.

In a bid to position India as a global EV manufacturing hub, the central government on Monday notified guidelines under its recently announced electric vehicle investment scheme. The policy aims to attract global players — such as U.S. electric carmaker Tesla — by offering strategic import and investment incentives.

Under the scheme, approved manufacturers will be allowed to import fully built electric four-wheelers (CBUs) priced at a minimum CIF (cost, insurance, and freight) value of $35,000 at a reduced customs duty of 15 per cent for up to five years. However, this benefit is capped at 8,000 units per year, with the option to carry forward unused import quotas.

To qualify, applicants must commit to investing at least ₹4,150 crore in local manufacturing capabilities, in alignment with the government’s Make in India vision.

With both market dynamics and policy support aligning, India’s electric vehicle sector is poised for sustained growth. While supply-side challenges remain, rising consumer acceptance, competitive offerings, and foreign investment incentives are steering the country firmly onto the green mobility path.