Electric Cars To Have Over 7% Market Share By FY28: Report

Electric cars in India are expected to have a share of over 7% by the end of March 2028, according to CareEdge Advisory, a business advisory firm. The emerging segment of electric cars has already grown by 21 times over the past three years, from 5,000 units in FY21, to over 1.07 lakh units in FY25.

The projected increase in sales is subject to certain conditions, like the timely resolution of the ongoing rare earth element crisis, backed by new model launches and the government’s push for improving the country’s charging infrastructure. 

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Government initiatives like the upcoming FAME-III and the Production Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) batteries are expected to lower vehicle production and improve domestic supply chains. Which in turn should make electric cars more favourable to the masses. 

Currently, India imports nearly all its lithium-ion cells, predominantly from China, Japan and South Korea. Due to this, domestic price competitiveness has been restrained, and the sector is exposed to chain shocks. CareEdge points out that battery localisation, along with custom duty exemptions and economies of scale, could alone reduce battery costs by 20-25%, which currently accounts for 35-45% of the total cost of an EV. The FY 26 budget has already introduced zero basic customs duty on 16 key minerals used in EV batteries, which in turn will lower production costs. With this in continuation, the report notes that import dependency could fall by 20% by FY 27.

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A poorly developed charging infrastructure in the country has been one of the biggest hindrances towards EV adoption. However, a CareEdge Study has found that EV chargers in the country have grown 5 times in the last three years, from 5,151 chargers in FY22 to over 26,000 by early FY25. Despite this growth, as of FY25, India had only one public charger for every 235 EVs, compared to one charger per 7-15 EVs in developed EV markets like China, the EU and South Korea. To combat this shortcoming, there has been an ongoing coordinated push by the central government and private players alike. 

Vehicle OEMs have also taken several active steps to develop public infrastructure for EVS in the country. For example, they offer smart home chargers bundled with every EV purchase and are working toward establishing fast-charging corridors across key metropolitan cities. 

”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,” says Tanvi Shah, Senior Director & Head, CareEdge Advisory & Research.

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But a major headwind in this EV journey is China’s recent move to impose export restrictions on rare earth elements. Since India currently sources over 90% of its REE imports from China, the ecosystem is currently very vulnerable to price and supply volatility. However, mitigation measures are already underway, including diversifying import sources, developing strategic stockpiles and scaling rare earth processing domestically, which the advisory firm’s Report also highlights. If the current momentum continues, then over a period of five years, EVs can prove to be cost-competitive, or even cheaper than comparable conventional ICE vehicles.