EV sales in India rise amid Iran war, boosting hopes for wider adoption

EV sales appear to have crossed the tipping point for mass-market adoption. In Q1 of 2026, EV sales grew by 35% year-on-year, accounting for 9% of total automobiles (including two and three-wheelers) sold in the country.

Multiple factors are driving the sales uptick: supply chain disruptions from the West Asia conflict, strong volume growth in two- and three-wheeler EVs, and the launch of new EV models. According to a Reuters report, this sales surge extends beyond electric vehicles.

Maruti Suzuki has claimed that bookings for its CNG vehicles jumped 40% following the fuel price hikes. The brand also showcased its first mass-market flex fuel vehicle recently — the WagonR Flex Fuel that’s engineered to run on 100% ethanol and ethanol-petrol blends from E20 to E100.

It’s not strictly the price hike or the notional resource scarcity that’s driving consumers to adopt alternatives to ICE (Internal Combustion Engine). It’s also the idea that their current or next purchase may not be compatible with whichever strong blend of ethanol is rapidly rolled out at petrol stations across the country.

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According to a report in the Business Standard, India has roughly 24 crore two-wheelers and 4 crore cars on the road that were originally designed for lower ethanol blends. Experts are also concerned that oil companies will eventually pass on higher crude costs to motorists.

For passenger vehicles, the increase in sales is across segments. In April, Tata Motors Passenger Vehicles Managing Director Shailesh Chandra told the Business Standard that EV demand had risen by 20–25% in March as consumers reacted to uncertainty around fuel prices caused by the West Asia conflict. The company noted that buyers were increasingly looking at EVs as protection against future petrol and diesel price hikes.

At a time when luxury EV sales are suffering globally, market leader Mercedes-Benz India stated that battery electric vehicles accounted for 20% of the company’s total top-end luxury sales in FY2026, according to Autocar Professional. BMW noted that EVs accounted for 26% of its Indian sales in the first quarter of 2026, up from 21% a year earlier.

CAFE III norms

The upcoming CAFE III (Corporate Average Fuel Efficiency) norms are not an EV mandate, but they are likely to become one of the strongest regulatory forces pushing Indian automakers toward electrification between 2027 and 2032. The government is targeting a reduction in fleet-average emissions from roughly 113 g/km today to around 78.9 g/km by FY32, representing the steepest tightening yet under India's fuel-efficiency regime.

As a result, the price of ICE vehicles, particularly entry-level vehicles, could become up to 17% more expensive by FY32 as manufacturers add technologies such as start-stop systems, TPMS, regenerative braking, improved transmissions and other fuel-saving measures to meet CAFE III targets.

In a market as price sensitive as India, the increasing cost of entry-level ICE vehicles could accelerate hybrid and EV adoption even further. As of June 1, Hyundai Motors joined Mahindra, Tata Motors and Maruti Suzuki in hiking the price of its cars, after holding off for the month of May. The company said it was doing this due to rising input costs, increased commodity prices and higher operational expenses, among other reasons.

ICE vehicles are likely to become more expensive over the next few years as manufacturers absorb the costs of complying with stricter regulations. These include the upcoming CAFE III fuel-efficiency norms, more advanced emissions-control systems, potential Real Driving Emissions (RDE) requirements, upgrades for compatibility with higher ethanol blends such as E22, E27 and E30, and the adoption of new fuel-saving technologies.

Together, these measures are expected to increase the cost of developing and producing conventional petrol and diesel vehicles. At the same time, battery prices are expected to come down. The most recent edition of the International Energy Agency's Global EV Outlook found that average battery prices declined by 8% in 2025, driven by manufacturing efficiencies, technology improvements and intense competition among battery producers. The report also notes that lithium-iron-phosphate (LFP) batteries, which are widely used in affordable EVs, have become significantly cheaper than nickel-based alternatives.

The forecast

Although experts had shown skepticism in the past, current circumstances could bring about widespread adoption. While the goal was to achieve 30% market penetration for passenger vehicles by 2030, a study from Bain & Company expects EVs to account for 15–20% of passenger vehicle sales by 2030, equivalent to roughly 1 million electric passenger vehicles sold annually. The International Energy Agency's India scenarios suggest passenger-car EV penetration could reach around 15% under current policies and exceed 30% under an accelerated policy pathway by 2030.

(Parth Charan is an automotive journalist based in Mumbai)