Market share of electric cars in India accelerates past 4% in May

The market share of electric passenger vehicles (EVs) in India accelerated past the 4 per cent mark in May this year, from 2.6 per cent in the same month of the previous year, reflecting the increasing popularity of electric cars among Indian buyers as the country transitions to green mobility, data compiled by the Federation of Automobile Dealers Associations (FADA) shows.

The share of electric passenger sales in May is also 0.5 percentage points higher than the 3.5 per cent share in April as part of the rising trend.

The retail data shows 12,304 electric cars were sold during the month, compared to just 8,029 units in May 2024. The sales of electric cars in April this year stood at 12,233 units.

“This is an important milestone in our industry's journey towards electrification. This growth has been driven by improvements in battery technology, better range, and lower costs compared to earlier electric PV models,” Fada CEO Saharsh Damani said.

Tata Motors maintained its market leadership in the electric car segment by selling 4,351 units during the month. Its closest competitor, JSW MG Motor, reported a strong year-on-year surge of 149 per cent, selling 3,765 electric cars in May, while Mahindra & Mahindra was ranked third with 2,632 units sold during the month. These top three electric car companies account for as much as over 87 per cent of total sales in the segment, according to FADA figuresHowever, FADA projects that global supply-chain headwinds (rare-earth constraints in EV components, geopolitical tensions) may limit urban consumer sentiment and exert cost pressure.

China, which is the dominant supplier of rare earth magnets, a critical component for the manufacture of electric vehicles, has started imposing restrictions on exports, which could pose supply chain problems.

“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 said.

Meanwhile, the government notified guidelines on Monday for its forward-looking scheme to enable fresh investments from global manufacturers in the electric cars segment and promote India as a global manufacturing hub for e-vehicles.To encourage global manufacturers such as US tech giant Tesla to invest under the scheme, the approved applicants will be allowed to import completely built-in units (CBUs) of electric four-wheelers with a minimum CIF (cost insurance and freight value) of $35,000 at reduced customs duty of 15 per cent for a period of five years from the date that the application is approved.

Approved applicants would be required to make a minimum investment of Rs 4,150 crore in line with the provisions of the scheme.The maximum number of e-4Ws allowed to be imported at the reduced duty rate will be capped at 8,000 units per year.

The carryover of unutilized annual import limits would be permitted.