PM has made an appeal for EVs. Now, it’s over to carmakers

Among all of Prime Minister Narendra Modi’s appeals to the nation, including reducing gold buying and curbing foreign travel, perhaps the one with biggest implications for citizens and policymakers alike is the appeal to curb usage of fossil fuels and hence increase use of electric vehicles.

In this context, it would be instructive to look at the EV policies of various states (there is no pan-India EV policy), especially with regards to private cars. This is because while the penetration of EVs in public transport, buses, light logistics and two-wheeler categories has been robust, it has been severely lacking in the car category. EV penetration for cars is rather abysmal: Around 10 per cent in the Rs 12.5 lakh plus category, and less than 1 per cent below that.

India recorded around 24.5 lakh EV sales in FY2025–26, with overall EV penetration crossing around 8.3 per cent across vehicle categories, primarily driven by two and three wheelers.

“India’s EV policy landscape has evolved significantly over the last few years, but FY2025–26 data clearly shows that policy intent alone is no longer enough. The states driving sustained EV penetration are those that have moved beyond subsidies and built integrated ecosystems spanning charging infrastructure, manufacturing, fleet electrification, and grid readiness," Saket Mehra, Partner and Auto & EV Industry Leader, Grant Thornton Bharat, told FirstPost.

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How the states fare

Just last month, the Delhi government released a draft EV Policy, for the period 2026-2030. It provides 100 per cent road tax and registration fee waiver for EV cars under Rs 30 lakh, and a 50 per cent waiver for the same for ‘strong’ hybrid cars till 2030. It has also scrapped Rs 1.5 lakh purchase incentive and 100 per cent road tax waiver on new EV cars, which the current EV policy provides for. The new draft also requires carmakers to install at least one charging station per dealer.

Other states have similar existing policies. The likes of Chandigarh and Tripura offer cash subsidies as well as road tax waiver to varying degrees, while Uttar Pradesh, Rajasthan, Haryana and Chhattisgarh also provide similar benefits to hybrids. UP has a 100 per cent road tax waiver and cash subsidy of upto Rs 1 lakh or 15 per cent of factory price. Haryana has a 25 per cent road tax waiver and cash subsidy of upto Rs 3 lakh.

The most EV-friendly policy is likely that of Meghalaya, which has a 100 per cent road tax waiver and cash subsidy of Rs 4,000/kilowatt hour. Then there is Karnataka, which had all EVs exempt from road tax. However, that was amended to now impose a lifetime tax of 10 per cent on all EVs above Rs 25 lakh.

State policies also show that EV subsidies cannot be open-ended. UP’s purchase subsidy was designed as a one-year early-bird incentive. Rajasthan’s incentives were capped and category-specific. Maharashtra’s new policy continues support but in a calibrated and capped form. Tamil Nadu continues tax exemption but focuses strongly on manufacturing and ecosystem creation. Karnataka’s move to tax EVs also shows that states are beginning to balance clean mobility with revenue realities.

Delhi’s proposed removal of EV benefits above the Rs 30 lakh price-point shows an admirable thinking that the rich and the elite should not be receiving subsidies or exemptions. By the same metric, the Karnataka government should also be commended.

Have automakers shunned responsibility?

“The central and state governments have taken many steps, but more needs to be done on demand side. Battery as a Service (BAAS) needs to be encouraged further. The centre’s push this week to boost coal gasification will make our electricity grid cleaner. And the unavoidable increase in petrol and diesel prices may also compel many to turn to EVs,” said Som Kapoor, Partner and Future of Mobility Leader at EY-Parthenon India. Kapoor added that automakers will also have to eventually provide options at more competitive prices.

A basic calculation shows that EV subsidies and cash benefits from various governments combined can enable a customer to almost make up the purchase price of the vehicle. And let us keep in mind that there is no EV or even a hybrid car available in the sub- Rs 10 lakh on-road price category. It is a travesty, that in their efforts to push electric mobility, some states have provided upper middle-class buyers with bigger subsidies than farmers and the rural and urban poor.

India’s mobility is headed towards a fully electric future, but there are still implementation gaps. The electric charging network is still not as widespread as petrol pumps, and EVs are not for the middle and aspirational classes. An overwhelming majority of India’s middle class families would not want to exceed a budget of Rs 6-10 lakh while buying a car. Additionally, the EV thrust is counterproductive if these cars continue to be charged from a network which is 50 per cent coal-powered (upto 70 per cent during peak summer demand).

One also needs to talk about the carmakers. The likes of Hyundai, Maruti Suzuki, Tata Motors, and Mahindra, among others, have done a great disservice to Indian economy, environment and society, by not providing EVs and strong hybrids in the Rs 6-8 lakh range. The need of the hour is to invest more in research & development in order to make the existing powertrains and technologies more affordable.

“India’s EV market is still in the early stages of true mass-market disruption, which explains why the sub-Rs 10 lakh passenger vehicle segment remains largely underserved today. The challenge is not simply product development — it is the ability to deliver acceptable range, battery reliability, safety, and profitability at a price point suited to India’s highly cost-sensitive consumers,” said Grant Thornton’s Mehra.

Mehra said trhat battery costs continue to be the biggest constraint, accounting for nearly 30-40 per cent of total EV cost. While global battery prices have moderated over the past few years, the economics are still not favourable enough for most OEMs to launch multiple sub-INR 10 lakh EVs without significant trade-offs on range, features, or margins.

“Widespread adoption will depend not just on lower sticker prices, but on reducing total cost of ownership concerns around charging access, battery replacement costs, financing, and resale value. In many ways, India’s EV transition will accelerate when EVs stop being positioned as premium technology products and start becoming economically practical mobility solutions for middle-income consumers,” he said.

(Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)