India's Electric Vehicle Market Gains Momentum Despite Challenges: BNPP Report

India’s electric vehicle sector continues its upward trajectory, with notable growth across two-wheelers (E2W), three-wheelers (E3W), and passenger vehicles (EPV) in February 2025. According to BNP Paribas' latest sector research report, EV penetration improved month-on-month across all segments, though certain market dynamics led to fluctuations in sales volumes and market share redistribution among key players.

Two-Wheeler Segment

The E2W market demonstrated a mixed performance in February 2025. While adjusted year-on-year (y-y) sales saw an uptick, a month-on-month (m-m) decline of approximately 23% was recorded. EV penetration also dropped from 6.4% in January to 5.6% in February, indicating a temporary slowdown. However, when adjusted for unregistered sales by Ola Electric, penetration showed an increase to 6.8%.

Ola Electric continued to dominate, accounting for a 28% market share despite ongoing negotiations with vehicle registration agencies. Bajaj Auto (BJAUT) gained the most market share at 23.2%, while TVS Motors (TVSL) suffered a significant decline of 4.12 percentage points. TVSL’s reduction in market share followed price cuts on its iQube EV, made possible by passing on incentives from the government’s PLI scheme.

Among states, Delhi witnessed the highest improvement in E2W penetration, rising from 3.7% in January to 4.4% in February. Rajasthan, in contrast, experienced the most significant decline, dropping from 8.1% to 6.4%.

Passenger Vehicle Segment

The electric passenger vehicle segment recorded a 19% year-on-year growth, though a 24% month-on-month decline was observed. Notably, EPV penetration increased to 2.4% in February from 2.1% in January.

Hyundai emerged as the biggest gainer in market share, climbing 5.45% to 8.3%, largely due to the launch of the Creta EV. Tata Motors remained the leader in the segment, though its share slipped to 43%, while MG Motor also lost ground, declining to 36.8%.

Geographically, Delhi led the penetration growth, while Uttar Pradesh saw a decline. The report anticipates CY25 to be a pivotal year for EV adoption, with multiple new launches from leading manufacturers. Maruti Suzuki is set to introduce the e-Vitara, while Mahindra & Mahindra will launch the XEV 9e and BE 6e in the coming months. However, the rise of hybrid vehicles could create new competitive dynamics in the market.

Three-Wheeler Segment

The E3W market showcased healthy year-on-year growth of 4% in February, with penetration rising to 56% from 55.6% in January. Mahindra & Mahindra (MM) expanded its market leadership, increasing its share to 11.1%, while Bajaj Auto lost ground, slipping to 8.7%.

Tamil Nadu saw the highest improvement in penetration, while Kerala recorded the most significant decline. The E3W segment continues to play a critical role in India’s EV transition, especially in urban and semi-urban areas, where electric rickshaws have become a preferred mode of transportation.

India’s EV market is steadily progressing, supported by increasing penetration across segments and strategic initiatives from OEMs. However, challenges such as registration bottlenecks, competitive pricing strategies, and the rise of hybrid vehicles could impact the trajectory of growth, the report concluded.