New Delhi: India’s electric two-wheeler (e2W) industry is poised for a 25% volume growth in the current fiscal (FY26), following a milestone achievement of over one million units sold in FY25, representing 6% of the total two-wheeler market.
A Crisil Ratings report attributes this growth to increased competition, expanded model availability, and broader distribution networks, particularly from established legacy manufacturers.
The cost advantage of e2Ws over Internal Combustion Engine (ICE) vehicles is a key growth driver.
Legacy manufacturers, leveraging robust cash flows from their ICE businesses, have captured 45% of the e2W market share in FY25, up from just 15% in FY23, thanks to their strong brand presence and distribution strength.
In FY26, the entry of two more legacy manufacturers into the e2W market is expected to intensify competition further.
While traditional manufacturers are well-positioned, pure-play e2W makers face challenges.
According to Anand Kulkarni, Director of Crisil Ratings, “The growing competition and focus on market share are likely to extend the break-even period for e2W players. Many may take 2-3 years to achieve EBITDA breakeven at the current growth rate.”
The industry has been reducing prices to boost volumes, aided by two factors: the introduction of affordable models with smaller battery packs, narrowing the upfront cost gap with ICE vehicles to 5-10%, and a 20% drop in battery prices in FY25, part of which has been passed on to consumers.
Looking ahead, battery prices are expected to stabilize, supporting the industry’s cost structure.
Production-linked incentive (PLI) schemes for the automotive and battery sectors are anticipated to further enhance profitability as sales volumes grow.
These developments, coupled with rising competition, are expected to significantly increase e2W penetration in the Indian market.
