October 14, 2025
2025 has been a pivotal year for the EV car market. In August, the legacy manufacturer, Maruti Suzuki, launched its first, battery only global EV, e-Vitara and started its production at the Gujarat plant. Mahindra expanded its EV line-up with the BE.06 (BE6) and the XEV 9e among its new models. Hyundai introduced e-Creta Electric for the Indian market earlier this year. Tata Motors continued its EV portfolio expansion with the Harrier.ev. Meanwhile, MG Motors has been aggressively focussed on building its presence in the EV segment with 84% of MG sales coming from its EV portfolio in July 2025. Furthermore, Vinfast, a Vietnamese electric-only 4W manufacturer, set up a manufacturing plant in Tamil Nadu and officially launched two models for the Indian market in Bharat Mobility Global Expo 2025.
However, the policy support for electric cars shifted in 2024; earlier FAME-II explicitly included demand incentives for electric four-wheelers (E-4Ws), while PM E-DRIVE (the successor program) provides incentives on E-2W, E-3W, E-buses, E-trucks and charging infrastructure, but not for passenger cars.
This resulted in a massive drop in the growth of E-4W sales in 2024. However, multiple manufacturers have launched mainstream EVs in 2025. Furthermore, state demand incentives, lower GST, improved affordability (falling battery costs, financing offers, BaaS and OEM festival promotions), changing consumer preferences, fleet electrification and charging infrastructure expansion have collectively offset the reduction in national demand incentives. These forces made a near-term recovery for the E-4W segment plausible despite the policy shift.
Our estimates suggest that by the end of 2025, the E-4W segment is expected to grow at an impressive CAGR of 110% for the period (2020-2025). In contrast, the broader 4W market grew at about 12% CAGR. The EV penetration for 4Ws (total nos. of E-4Ws/total nos. of 4Ws) is estimated to be 20x the 2020 number and projected to reach 4% in 2025.
Year | E-4W sales | Total 4W sales | E-4W penetration | E-4W sales YoY growth | Total 4W sales YoY growth |
2020 | 4,207 | 24,53,499 | 0.2% | ||
2021 | 13,002 | 29,85,857 | 0.4% | 209% | 22% |
2022 | 38,170 | 34,53,722 | 1.1% | 194% | 16% |
2023 | 80,121 | 37,53,065 | 2.1% | 110% | 9% |
2024 | 93,551 | 38,91,155 | 2.4% | 17% | 4% |
2025 (Jan-July) | 85,399 | 23,52,341 | 3.6% | ||
2025E | 1,74,887 | 43,26,376 | 4.0% | 87% | 11% |
*Note: 2025E is an estimation of yearly sales for 2025
Table 1: Breakup of 4W sales from 2020-2025 | Source : India EV Dashboard
Although the upfront cost of EVs is significantly higher, it appears that consumers are willing to pay the premium over its Internal Combustion Engines (ICE) counterpart. The difference in cost of the top selling TATA punch ICE and its EV variant is at a substantial 68%.
At the same time, MG Motors has successfully established a foothold in the EV segment in India. Despite the Windsor being positioned two segments above the Punch and a segment above the Nexon, its pricing remains closely aligned with these models.
Model | Units Sold | Top-selling ICE variant | ICE Variant On-road Price (₹) | Top-selling EV Variant | EV Variant On-road Price (₹) | Premium over ICE counterparts (%) |
MG Windsor EV | 19,394 | -- | -- | Windsor EV Essence | 14,74,742 | -- |
Tata Punch EV | 17,966 | Punch Pure CNG | 8,37,752 | Adventure LR AC FC | 14,05,930 | 68% |
Tata Tiago EV | 17,145 | Tiago XT | 7,49,472 | Tiago EV XT MR | 9,31,041 | 24% |
Tata Nexon EV | 13,978 | Fearless Plus PS Dark | 15,69,344 | Fearless 45 | 15,32,680 | -2% |
MG Comet EV | 10,149 | -- | -- | Excite FC | 9,53,654 | -- |
Note: ^On-road prices are for Mumbai and don't include discounts offered by the company or the effects of 2025 GST revision. #Top-selling variants are as mentioned by cardekho.com
Table 2: Top 5 selling EV models in FY2024-25 | Source : Cardekho
This indicates that consumers’ aspirations for premium E-4Ws are increasingly matching with manufacturers’ product line-ups and pricing strategies.
A granular analysis of the E-4Ws sales in 2025 across geographies show that the only five states are responsible for a striking 57% of the total E-4W sales.
Figure 1: E-4W sales and penetration | January-July (2025) | Source : India EV Dashboard
These states also witnessed remarkable growth in the E-4W segment compared to the same time-frame (January-July) as last year.
Figure 2: E-4W sales | January-July (2024 vs 2025) | Source : India EV Dashboard
The E-4W sales in Maharashtra nearly doubled, while Tamil Nadu reported 72% YoY increase in sales.
The remarkable increase in E-4W sales was despite significant reduction in demand incentives under the PM E-drive scheme. This might indicate that India’s E-4W market is at the cusp of being sustained by market forces. With the exception of Maharashtra, none of the top five states offer state-level demand incentives.
Maharashtra is one of the few states that still offers direct purchase incentives for EVs. The state offers ₹1,50,000 amount capped at 10% of the ex-factory cost. Additionally, the state waives-off motor vehicle tax;measures that materially improve the upfront economics for buyers.
It remains to be seen if Maharashtra should continue to provide demand incentives to bolster E-4W sales.
There are three key drivers aiding the E-4W adoption in India - Policy Support, Consumer Aspiration and Product Availability.
While policy support in the form of demand incentives has been gradually reduced; manufacturers have responded by improving product line-up and pricing.
Consumer demand has responded when product choice and price align to create value.
Electric cars seem to be an aspirational good - consumers do not mind paying a significant premium compared to ICE counterparts. This consumer sentiment is expected to grow across all premium (+INR 10 lakh) segments.
State policies can meaningfully accelerate adoption, Maharashtra’s example shows that demand incentives and tax waivers still move the needle. Yet it remains to be seen if demand incentives continue to be required to sustain and accelerate the adoption.