Electric cars sales to cross 7% market share by FY28 by CareEdge Advisory
According to CareEdge Advisory, the electric car sales penetration is expected to rise rapidly and cross 7% by FY28, subject to timely resolution of rare earth element (REE) disruption, backed by new model launches and government push for improving the charging infrastructure in the country.
CareEdge Advisory report notes that India’s electric car ecosystem has witnessed significant momentum over the past three years, growing from just over 5,000 units in FY21 to more than 1.07 lakh units in FY25, representing a nearly 21x increase. While electric four-wheelers still comprise a small share of total EV sales—dominated by two- and three-wheelers—the segment is now entering a high-growth trajectory supported by both public policy and private sector commitment.
The Indian government has committed to achieving 30% EV penetration by FY30 and is taking an active role in enabling this transition. Initiatives such as FAME III, the Production Linked Incentive (PLI) Scheme for advanced chemistry cell (ACC) batteries, and basic customs duty exemptions on critical battery minerals—including cobalt, lithium-ion waste, and graphite—are expected to lower vehicle production costs and improve domestic supply chain resilience.
Charging infrastructure, historically one of the most significant bottlenecks in India’s electric vehicle (EV) adoption journey, is now witnessing unprecedented growth. CareEdge Advisory report notes that over the past three years, the number of Public EV Charging Stations (EVPCS) in India has grown nearly 5x, from 5,151 in CY22 to over 26,000 by early FY25, translating into a robust CAGR of more than 72%. This expansion is the result of a coordinated push by the central government, proactive state-level EV policies, and a rising wave of private sector participation. Several flagship initiatives are driving this progress. The FAME III scheme includes dedicated outlays for expanding charging infrastructure, while states such as Maharashtra, Delhi, Tamil Nadu, and Gujarat have rolled out targeted EV infrastructure incentives—ranging from land subsidies to capex support. These measures are being complemented by urban municipal programs mandating EV-ready parking slots in residential and commercial developments.
Furthermore, Original Equipment Manufacturers (OEMs) are taking active steps to complement public infrastructure with private charging networks. Leading automakers have begun offering smart home charger installations bundled with EV purchases, in addition to setting up fast-charging corridors across key metropolitan cities and highways. The goal is to ensure EV drivers can find a reliable charging station every 5 to 10 kilometres in dense urban zones—a strategy that significantly reduces range anxiety, currently a top concern among potential EV buyers. Despite this impressive progress, India’s charging network lags far behind global benchmarks. As of early FY25, India had only one public charger for every 235 EVs, compared to one per 7–15 EVs in developed EV markets like China, the EU, and South Korea. This underlines the need for sustained acceleration, particularly in Tier-II and Tier-III cities where charging infrastructure remains sparse.
To bridge this gap, several innovative models are emerging. These include battery swapping stations for fleet operators, mobile charging vans, community-based shared chargers, and solar-powered charging kiosks in rural areas. Private charge point operators (CPOs) are also scaling operations rapidly, often through public-private partnerships (PPP) with municipal corporations and DISCOMs.Moreover, policy emphasis is shifting toward standardisation and interoperability, with the Bureau of Energy Efficiency (BEE) and NITI Aayog pushing for uniform protocols across chargers to ensure user convenience. Integrating payment systems, enabling real-time charger visibility via mobile apps, and offering predictive maintenance services are additional steps being taken to modernise the charging experience.
Tanvi Shah, Senior Director & Head, CareEdge Advisory & Research said, “India’s electric car sales penetration is likely to cross 7% by FY28, provided rare earth disruption is resolved in a timely manner. With a robust pipeline of model launches, expanding EV charging infrastructure and battery localisation under the PLI scheme, India is well-positioned to accelerate EV adoption.”
The recent budget for FY26 introduced zero basic customs duty on 16 key minerals used in EV battery manufacturing, reducing reliance on imports and lowering production costs. CareEdge estimates that India’s lithium-ion cell import dependency could fall to ~20% by FY27, compared to nearly 100% in FY22, with ongoing investments in integrated battery manufacturing capacities.
Battery packs continue to account for 35–45% of the total cost of an EV. Presently, India imports nearly all its lithium-ion cells, predominantly from China, South Korea, and Japan. This reliance constrains domestic price competitiveness and exposes the sector to supply chain shocks. CareEdge estimates that battery localisation, along with customs duty exemptions and economies of scale, could reduce battery costs by 20–25% over the next 3–5 years, significantly improving EV affordability. In addition to policy incentives, the domestic battery value chain is also being strengthened through R&D investments, technology partnerships, and local raw material sourcing initiatives.A potential headwind in the EV journey is China’s recent move to impose export restrictions on seven rare earth elements (REEs)—essential for electric motors and other EV components. India currently sources over 90% of its REE imports from China, making the ecosystem vulnerable to price and supply volatility. The impact could extend across electric, hybrid, and ICE vehicle production in FY26.
However, CareEdge Advisory notes that mitigation measures are already underway, including efforts to diversify import sources, develop strategic stockpiles, and scale up rare earth processing domestically. Despite the higher upfront cost, electric cars offer significant long-term savings through lower running costs, reduced maintenance, and government incentives like tax rebates and waived registration fees. Over a five-year usage period, EVs can prove cost-competitive or even cheaper than conventional internal combustion engine (ICE) vehicles.
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