EV penetration may rise to 10-12% of total vehicle sales in FY27, claims study

Electric vehicles are entering a broader scale-up phase in the Indian automobile industry. The EV penetration in the Indian market is likely to increase to 10-12% of the overall vehicle sales in FY27 from 8.5% registered in FY26, according to ratings agency Ind-Ra. It also said the electric two-wheelers will be driving this growth momentum. The agency expects EV adoption to remain strongest in segments where the economics of electrification are already compelling.

According to Ind-Ra, the two-wheeler EV penetration is estimated to increase to 8-10% in FY27, up from 6.6% recorded in the last financial year. This growth is expected to be supported by lower operating costs, convenient home-charging options, and a growing product portfolio from incumbent automakers in the segment. Electric passenger vehicles are likely to record robust growth from a small base, with penetration increasing to 6-8% in FY27, up from 4.4% in FY26. The key driving force behind this growth is the launch of new models.

The electric three-wheelers are expected to remain the most electrified vehicle category, with penetration increasing to 62-65% in FY27 against 59% in FY26. The ratings agency stated that this growth in the electric three-wheeler segment will be driven by attractive operating economics for commercial operators and continued government support. It also added that electric bus penetration is expected to rise to 6-8% in FY27 as against 4.37% in FY26, aided by strong order books and government procurement programmes. However, deployment of electric buses still depends on infrastructure readiness across state transport undertakings.

The ratings agency further stated that electrification in long-distance mobility segments would progress more gradually, as consumers continue to evaluate higher upfront acquisition costs, charging accessibility, and driving range considerations.

Urban and high-income consumers to drive EV penetration growth

EV adoption to remain concentrated in metropolitan markets and higher-income consumer segments, said the agency.

Speaking about the EV penetration projection, Shruti Saboo, Director, Corporates at Ind-Ra, said, the country's electric vehicle market continues to demonstrate healthy growth potential, with adoption increasingly supported by favourable ownership cost, improving use-case economics, a widening range of vehicle offerings, and rising consumer acceptance. "The next phase of India's EV growth will depend on the development of a robust domestic value chain, where India reduces its dependence on imports and strengthens indigenous capabilities across key EV components, particularly batteries and related technologies, alongside expansion of charging infrastructure," Saboo said.

Check out Upcoming EV Cars in India, Upcoming EV Bikes in India.