India’s electric vehicle (EV) sector continues to gain momentum as the market share of electric passenger vehicles crossed the 4 percent mark in May 2025. This milestone reflects the evolving preferences of Indian consumers who are increasingly shifting towards sustainable mobility options.
According to data compiled by the Federation of Automobile Dealers Associations (FADA), electric passenger vehicles now account for 4 percent of total passenger car sales in the country. This marks a notable increase from the 2.6 percent market share recorded during the same period last year. The figures also show an improvement from April 2025, when electric cars constituted 3.5 percent of the overall passenger vehicle market.
In absolute terms, 12,304 electric cars were sold in May 2025, a significant jump from the 8,029 units sold in May 2024. On a month-on-month basis, sales saw a slight uptick as well, compared to 12,233 electric cars sold in April this year.
FADA CEO Saharsh Damani noted that this progress underscores the growing appeal of EVs among Indian consumers. “The growth we are witnessing is being propelled by advancements in battery technology, extended vehicle range, and a decrease in costs relative to earlier electric passenger vehicle models,” Damani stated.
Tata Motors Leads, MG Motor and Mahindra Gain Ground
Tata Motors continues to dominate the Indian electric car market, retaining its leadership with 4,351 units sold during May 2025. The company’s diversified EV portfolio and established presence in the segment give it a competitive edge.
Close on Tata’s heels, JSW MG Motor has recorded remarkable growth. The company sold 3,765 electric cars in May, achieving a 149 percent year-on-year increase in sales. Mahindra & Mahindra followed as the third-largest player in the segment, having sold 2,632 units during the same period.
Combined, these three automakers account for over 87 percent of India’s total electric passenger vehicle sales, highlighting their substantial influence on the EV market landscape.
Supply Chain Challenges Could Temper Growth
Despite this encouraging growth, the industry faces several challenges. FADA has flagged potential headwinds that could affect the future trajectory of EV sales.
Global supply chain issues, particularly concerning rare-earth elements, pose a threat to production capacity. Rare-earth magnets are critical components used in the manufacturing of electric motors. China, which holds a dominant position in the global supply of these materials, has introduced restrictions on exports. This move is expected to impact international supply chains.
“If the supply situation for rare-earth materials remains constrained, production slowdowns could occur, potentially affecting retail sales in the near term,” Damani cautioned.
Additionally, geopolitical tensions and increasing raw material costs are exerting pressure on both manufacturing and consumer sentiment, particularly in urban markets where EV demand has been strongest.
Government Initiatives to Foster New Investments
To bolster India’s EV manufacturing capabilities and attract fresh investments, the central government has recently notified guidelines for a new scheme aimed at transforming India into a global EV manufacturing hub.
Under the scheme, approved applicants will be permitted to import completely built units (CBUs) of electric four-wheelers with a minimum cost, insurance, and freight (CIF) value of $35,000 at a reduced customs duty of 15 percent. This preferential duty rate will be applicable for five years from the date of approval.
Applicants approved under the scheme must commit to making a minimum investment of Rs 4,150 crore, ensuring that the program drives significant domestic manufacturing and ecosystem development.
Import limits will be regulated, with a cap of 8,000 electric four-wheelers per year permitted at the reduced duty rate. Any unused portion of the annual import quota can be carried forward, offering flexibility to participating companies.
Tesla and Global Interest in Indian EV Market
The new policy framework is expected to incentivize global players, including US electric vehicle giant Tesla, to invest in India’s burgeoning EV market. By offering a phased entry route via controlled imports and binding local investment commitments, the government aims to strike a balance between promoting foreign participation and nurturing the domestic industry.
Industry stakeholders believe that these guidelines will spur competition and innovation in the Indian EV space, ultimately benefiting consumers with a wider range of options and better technology.
Consumer Sentiment Remains Strong
The rising market share of electric cars underscores a broader shift in consumer attitudes towards clean mobility. Indian buyers are now more receptive to adopting EVs, supported by growing awareness of environmental concerns and improvements in the country’s charging infrastructure.
The steady reduction in EV costs, enhanced battery performance, and increased availability of models across different price segments are key factors driving consumer interest.
While supply chain uncertainties pose challenges, the government’s proactive policy measures and the competitive dynamism of the sector indicate a promising future for electric mobility in India.
The Indian electric car market is on a clear upward trajectory, with market share surpassing 4 percent in May 2025. Leading automakers continue to expand their offerings while the government’s new investment-friendly policies aim to position India as a global hub for electric vehicle manufacturing. Challenges remain, particularly around supply chain vulnerabilities, but the sector’s growth momentum appears strong. As consumer adoption deepens and new players enter the fray, electric cars are set to play an increasingly central role in India’s automotive landscape.
