India’s transport landscape has reached a turning point where ‘electric’ is no longer a future possibility but a present reality. In 2025, India’s electric vehicle (EV) market took a significant leap, crossing 2.3 million units in sales. This growth is not just numerical. It has pushed EVs to account for 8% of total vehicle registrations in the country. The pace at which consumers are shifting from conventional fuel vehicles to electric alternatives marks an important step toward India’s net-zero ambitions.
Let us examine what drove record EV sales in 2025 and what lies ahead for India’s electric vehicle industry.
What’s Happening?
EV penetration saw an unprecedented rise in 2025. According to the Vahan Portal, EVs accounted for 8% of the total 28.2 million vehicle registrations recorded during the year. This transition was led by two-wheelers, with sales reaching 1.28 million units, representing 57% of total EV sales. Three-wheelers (L3 and L5 categories) followed, recording 0.8 million units, or 35% of EV sales, highlighting their growing role in urban mobility.
The electric four-wheeler segment recorded sales of around 175,000 units during the year. Notably, passenger electric car demand surged by 77%, with total retail sales reaching 1,76,815 units. This reflects a sharp increase in acceptance among private car buyers. Across the broader auto market, 28.2 million vehicles were registered in 2025, with two-wheelers accounting for 72%, while passenger four-wheeler sales crossed 4.4 million units.
State-wise EV Adoption Trends
At the state level, Uttar Pradesh emerged as India’s largest EV market, accounting for 18% market share with over 4,00,000 units sold. Maharashtra followed with a 12% share, while Karnataka stood at 9%. Together, these three states contributed over 40% of India’s total EV sales, underscoring the decisive role of large state markets.
At the same time, EV adoption is not limited to large states. Delhi recorded an EV-to-ICE ratio of 14%, while Kerala stood at 12%. Smaller states showed even faster adoption, with Tripura leading at 18% and Assam at 14%. These trends suggest that electric mobility is gaining traction across diverse regions, including emerging and smaller markets.
Policy Support and the Impact of PM E-DRIVE
India’s EV policy is steadily shifting from a subsidy-led approach to a scale and infrastructure-driven growth model. Launched in October 2024, the PM E-DRIVE scheme carries an outlay of Rs 10,900 crore and supports electric two-wheelers, three-wheelers, buses, ambulances, and trucks. Initially scheduled to end in March 2026, the scheme has now been extended to March 31, 2028.
The programme earmarks Rs 2,000 crore for charging infrastructure and Rs 780 crore for testing facilities, clearly indicating a policy pivot away from personal EV subsidies toward public transport and ecosystem development.
Despite offering nearly half the per-vehicle subsidy compared to FAME II, PM E-DRIVE enabled deliveries of 1.13 million EVs in its first year. In contrast, FAME II spent over Rs 11,500 crore over five years to support significantly lower annual volumes. PM E-DRIVE has surpassed these volumes in a much shorter period, without expanding the subsidy bill—signalling a transition to a more sustainable phase of EV growth.
What Does This Mean for Investors?
From an investor’s perspective, the EV sector has evolved into a high-growth opportunity rather than a distant theme. In 2025, the EV ecosystem attracted $1.4 billion in investments, a 27% increase over 2024. Of this, $1.2 billion flowed directly into vehicle manufacturers, reflecting rising confidence in scale, execution, and demand visibility.
Tata Motors maintained its leadership position, selling 70,004 EV units, driven largely by the Nexon EV and Tiago EV. JSW MG followed with 51,387 units, recording 135% year-on-year growth, while Mahindra emerged as the biggest surprise, posting a 370% surge with 33,513 units sold, positioning itself as a serious challenger in the EV race.
Meanwhile, Hyundai (6,726 units) and BYD (5,402 units) continued to serve niche segments, maintaining presence despite relatively lower volumes. Overall, 2025 data confirms that EVs are no longer just a future bet for investors but an active, competitive, and evolving investment landscape.
What’s Next?
While 2025 was a strong year, growth momentum may moderate in 2026. According to Reuters, global EV sales growth is expected to slow. BMI forecasts 23.9 million EV sales globally, representing 15.7% growth. China is expected to grow at 21%, while growth in Europe (15%) and other regions (26%) may remain moderate. North America is projected to see a 23% decline, driven by a 29% slowdown in the U.S. market.
In India, policy priorities are also evolving. The Union Budget 2025–26 did not allocate additional funds to FAME, instead assigning Rs 4,000 crore to PM E-DRIVE. Signals suggest that the 2026–27 Budget may support EV adoption less through broad consumer subsidies and more through public transport investment.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
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