Electric Car Sales Expected to Reach 7% Market Share by 2028

Electric car sales penetration in India is projected to cross 7% by fiscal year 2028, according to a report released by CareEdge Advisory on July 16, 2025. The forecast depends on timely resolution of rare earth element disruption and continued government infrastructure development.

India's electric car sector has grown from just over 5,000 units in fiscal year 2021 to more than 107,000 units in fiscal year 2025, representing a 21-fold increase over three years. Electric four-wheelers currently comprise a small portion of total electric vehicle sales, which remain dominated by two- and three-wheelers.

The Indian government has committed to achieving 30% electric vehicle penetration by fiscal year 2030 through initiatives including FAME III, the Production Linked Incentive Scheme for advanced chemistry cell batteries, and basic customs duty exemptions on critical battery minerals such as cobalt, lithium-ion waste, and graphite.

Charging infrastructure development has accelerated in recent years. The number of public electric vehicle charging stations grew from 5,151 in calendar year 2022 to over 26,000 by early fiscal year 2025, representing a compound annual growth rate of more than 72%. This expansion results from central government programs, state-level policies, and private sector participation.

States including Maharashtra, Delhi, Tamil Nadu, and Gujarat have implemented targeted electric vehicle infrastructure incentives ranging from land subsidies to capital expenditure support. Original equipment manufacturers have begun offering smart home charger installations with electric vehicle purchases and establishing fast-charging corridors across metropolitan cities and highways.

Despite this progress, India's charging network remains below global standards. As of early fiscal year 2025, India had one public charger for every 235 electric vehicles, compared to one per 7-15 electric vehicles in developed markets like China, the European Union, and South Korea.

Battery costs represent 35-45% of total electric vehicle costs. India currently imports nearly all lithium-ion cells, predominantly from China, South Korea, and Japan. CareEdge estimates that battery localization, combined with customs duty exemptions and economies of scale, could reduce battery costs by 20-25% over the next three to five years.

The recent fiscal year 2026 budget introduced zero basic customs duty on 16 key minerals used in electric vehicle battery manufacturing. CareEdge estimates that India's lithium-ion cell import dependency could fall to approximately 20% by fiscal year 2027, compared to nearly 100% in fiscal year 2022.

A potential challenge stems from China's recent export restrictions on seven rare earth elements essential for electric motors and other electric vehicle components. India currently sources over 90% of its rare earth element imports from China, creating vulnerability to price and supply volatility.

CareEdge Advisory notes that mitigation measures are underway, including efforts to diversify import sources, develop strategic stockpiles, and scale up rare earth processing domestically. The impact could affect electric, hybrid, and internal combustion engine vehicle production in fiscal year 2026.

"India's electric car sales penetration is likely to cross 7% by FY28, provided rare earth disruption is resolved in a timely manner," said Tanvi Shah, Senior Director and Head of CareEdge Advisory and Research. "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."

Despite higher upfront costs, electric cars offer long-term savings through lower running costs, reduced maintenance, and government incentives including tax rebates and waived registration fees. Over a five-year usage period, electric vehicles can prove cost-competitive or cheaper than conventional internal combustion engine vehicles.