Fuel Price Hikes Fuel Surge in India's Electric Vehicle Registrations

India's Electric Vehicle Market Surges 70% Year-on-Year in May

India's electric vehicle market experienced a sharp acceleration in May, with total retail EV registrations exceeding 190,000 units, a 70% increase from the same period last year. According to a report by Bernstein, higher fuel prices emerged as a stronger demand driver than government incentives.

The increase in petrol, diesel, and CNG prices by oil marketing companies in the second half of May, following geopolitical tensions in West Asia, had an immediate impact on the market. Electric passenger vehicle sales in the first half of May stood at around 10,300 units, but surged to nearly 16,000 units in the second half of the month after fuel prices were raised, highlighting how total cost of ownership considerations are increasingly influencing buying decisions.

The electric two-wheeler segment remained the largest contributor to overall volumes, recording around 167,000 units in May, a 66% increase from a year earlier. Electric two-wheelers now account for 8.9% of the overall two-wheeler market, up from 6.7% in January this year.

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The passenger EV segment posted even stronger growth, with electric four-wheeler sales touching a fresh all-time high of about 26,000 units during the month, nearly doubling from a year ago with 98% growth. The milestone was driven by strong performances from domestic manufacturers, with Tata Motors crossing 10,000 monthly retail EV sales for the first time and Mahindra & Mahindra exceeding 6,000 units for the first time.

Importantly, Bernstein noted that the latest growth appears to be driven by market demand rather than government support. The brokerage pointed out that benefits under the PM E-Drive scheme were reduced after March, yet EV sales continued to scale higher, suggesting that the cost advantage of electric vehicles over internal combustion engine vehicles is becoming sufficiently compelling to sustain demand even with lower subsidy support.

The report also highlighted early signs of recovery at Ola Electric, whose monthly registrations had fallen to around 4,000 units in February, saw volumes recover to roughly 15,000 units in May. Market share has stabilised above 8%, which Bernstein described as the first meaningful indication that the company's efforts to improve service quality and recalibrate pricing may be gaining traction.

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The strong performance in India comes even as global EV demand remains uneven. Bernstein's latest EV Tracker showed global EV sales rose 7% year-on-year in April after a weak start to the year. While China recorded a 6% decline and North America saw sales fall 28%, emerging markets continued to drive growth. The "Rest of World" category, which includes markets such as Southeast Asia and Latin America, posted 111% growth, making it the fastest-growing EV region globally.

For India, however, Bernstein's key takeaway was clear: rising fuel prices appear to be accelerating EV adoption faster than incentives, marking a potentially important shift in the economics underpinning the country's electric mobility transition.