India EV car sales jump 40% to record levels; Crisil sees volumes doubling by FY28

Sales of electric passenger vehicles in India surged about 40% in the three months ended May to a record monthly average of around 26,000 units, and are expected to more than double by next fiscal year, ratings agency Crisil said on Thursday.

The growth comes as higher fuel prices, following tensions in West Asia, have increased the operating cost of petrol and diesel vehicles, improving the cost competitiveness of electric vehicles (EVs).

However, Crisil said the momentum in electric four-wheeler sales predates the recent fuel price spike and is increasingly being driven by structural factors including longer driving ranges, falling ownership costs and increasing product portfolios.

"The running cost of ICE vehicles increased 7-8 per cent this May due to spike in fuel prices. This has improved the relative total cost of ownership (TCO) of E4Ws by a good 300 basis points," Crisil Ratings said.

Electric car penetration rose to 6.1% during the three months through May, compared with an average of 4.6% in fiscal 2026, according to the agency.

"Their long-term growth trajectory remains intact," said Manish Gupta, senior director and deputy chief ratings officer at Crisil Ratings.

Electric four-wheeler volumes are expected to exceed 500,000 units by next fiscal year, up from about 220,000 units in the previous fiscal, lifting market penetration to 8%-10%, he said.

Electric vehicle acquisition costs have also declined by 10%-15% over the past two fiscal years, helped by product innovation and manufacturing scale efficiencies.

The number of electric passenger vehicle models available in India has doubled to around 20 over the past two years and is expected to exceed 35 by next fiscal year.

The consumer concerns over range has also eased as premium electric models now offer between 500 kilometres and 700 kilometres on a single charge, while mid-range vehicles deliver 300-450 kilometres.

“Extended battery warranties of 8–10 years and innovative ownership structures such as Battery-as-a-Service are easing concerns about upfront costs and long-term reliability,” Crisil added.

Automakers are increasing investments in electric mobility despite concerns that EVs remain less profitable than conventional vehicles.

Crisil estimates that more than 40% of the roughly ₹60000 crore of capital expenditure planned by automakers over this fiscal year and next will be directed toward expanding EV portfolios, localising supply chains and scaling production.

"Rising electric vehicle sales could be margin-dilutive for OEMs in the near term due to limited scale, high initial fixed costs and competitive pricing strategies," said Anand Kulkarni, director at Crisil Ratings. “Margins should expand gradually as volumes ramp up and operating leverage improves.”