Electric car sales to witness strong growth in 2026, but share in overall PV market to remain in single digits

The Tata Nexon.ev is among the largest-selling cars in India.

• Electric car sales in India grew 77% in CY25 but made up just 4% of PV sales.
• EV penetration is expected to reach 5-6% of PVs in CY26.
• Government and OEMs are expanding charging infrastructure to boost EV adoption.

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Although electric car sales have been gaining momentum in India and are projected to register strong growth in the calendar year (CY) 2026, their share in overall passenger vehicle (PV) volumes is likely to remain in single digits, according to industry analysts.

As per data from the industry body Federation of Automobile Dealers Associations (FADA), as many as 1,76,817 units of electric cars were retailed in the country in CY25, registering a growth of 77.04% year-on-year (y-o-y).

Industry analysts told Moneycontrol that the growth in CY25 was supported by rising adoption among private buyers, introduction of new models and expansion of charging infrastructure. While lower running and maintenance costs in comparison to internal combustion engine (ICE) vehicles continued to strengthen the total cost of ownership case, the carmakers bolstered their electric vehicle (EV) portfolios with refreshed products, they said.

The electric car sales had risen 20.78% y-o-y in CY24 and 116.23% y-o-y in CY23. While the segment has witnessed a continuous growth over the past few years, it has been on a relatively low base.

Moreover, the penetration of electric models in the overall PV sales is yet to reach even 5%. While the volumes grew over 77% y-o-y in CY25, the electric models accounted for merely 4% of the total car retails during the year.

Though the share is still very low, the only silver lining has been a consistent rise in it from 1.1% in CY22 to 2.1% in CY23 to 2.4% in CY24.

Industry analysts said that CY26 is expected to be a year of consolidation and structural deepening rather than headline acceleration, with EV penetration being in the range of 5-6%.

Crisil Intelligence Director Hemal Thakkar observed that the growth in CY26 is likely to be supported by continued product action, including new launches and refreshes, deeper penetration in Tier-1 and Tier-2 cities, increased repeat, referral purchases and wider acceptance of EVs as primary household vehicles rather than just second cars.

"With more original equipment manufacturers (OEMs) scaling up EV portfolios, CY26 would witness heightened competition, leading to sharper feature differentiation and improved aftersales support. While infrastructure constraints will persist, CY26 would see better charging density along key urban corridors and highways," he said.

Among India's five largest carmakers by volumes, EV offerings are currently limited to Mahindra & Mahindra, Tata Motors Passenger Vehicles and Hyundai Motor India. Maruti Suzuki India and Toyota Kirloskar Motor will shortly enter the EV space with their first electric models, a move that is set to widen options for customers in the segment.

In the luxury EV space, BMW India has so far maintained an edge over Mercedes-Benz India, although both brands plan to strengthen their line-ups with additional models during the year. The segment will also see the full-year impact of newer entrants such as Tesla and VinFast.

Grant Thornton Bharat Partner and Auto and EV Industry Leader Saket Mehra said that with a growing momentum within the EV mix, the industry expects strong double-digit growth in CY26, driven by wider model availability, improving financing options, and incremental demand from fleet and corporate buyers.

"Despite this momentum, passenger EVs are still expected to remain a low-single-digit share of the overall car market, underscoring that mainstream adoption is still evolving," he added.

"Looking ahead to CY26, the electric PV segment is expected to maintain strong momentum, with volumes projected at 2,40,000-2,60,000 units and EV penetration rising to nearly 5%," Crisil's Thakkar said.

On the charging infrastructure side, the Union government has laid out clear guidelines to expand public EV charging under the PM E-DRIVE scheme. With Rs 2,000 crore set aside for this push, the idea is to make charging points as easy to find as fuel pumps, so EV users can charge their vehicles at regular places instead of hunting for a dedicated station.

The Ministry of Heavy Industries has said chargers will come up at places people already visit every day -- government offices, hospitals, railway and metro stations, airports, malls, parking areas, bus depots and even public sector fuel stations. Highways are also part of the plan, with chargers planned at toll plazas and roadside facilities to make long-distance EV travel easier.

Additionally, OEMs are also playing their part to bolster the EV charging infrastructure in the country.

Maruti Suzuki has claimed to have invested nearly Rs 250 crore in establishing a charging network ahead of the launch of its maiden electric SUV, the e Vitara. Mahindra plans to set up 250 charging stations, each with 180kW, with over 1,000 charging points by the end of CY27. Tata already has over 2,00,000 charging points in its network through a combination of home charging, community charging and public charging through partners.

"Charging infrastructure quality, not just charger count, will be a gating factor. Industry expects faster growth in depot and fleet charging, while public fast-charging reliability in urban clusters will determine how quickly private car buyers gain confidence," said Mehra of Grant Thornton Bharat.

S&P Global Mobility Light Vehicle Production Forecasting Associate Director Gaurav Vangaal said that the EV penetration in the PV segment is expected to reach approximately 5.8% in CY26. "The key drivers will be regulatory pressure from upcoming CAFE III norms, crude oil price fluctuations with any additional geopolitical conflict and aggressive product launches across both mass and luxury segments. Luxury OEMs, in particular, will play a pivotal role in pushing penetration higher, while domestic manufacturers will focus on scaling production to make EVs more accessible," he added.