The reduction in PM E-DRIVE subsidies has created short-term challenges, particularly for E2Ws, but the report expects the market to adapt.
06 May 2025 | 431 Views | By Arunima Pal
The Indian electric vehicle (EV) market experienced a mixed performance in April 2025, with significant impacts from reduced subsidies under the PM E-DRIVE scheme, according to a recent report by BNP Paribas Exane. The report, titled "EVolution: Lowered Incentive Impact on 2W Electrification," highlights a slump in two-wheeler (E2W) electrification, ...
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The Indian electric vehicle (EV) market experienced a mixed performance in April 2025, with significant impacts from reduced subsidies under the PM E-DRIVE scheme, according to a recent report by BNP Paribas Exane. The report, titled "EVolution: Lowered Incentive Impact on 2W Electrification," highlights a slump in two-wheeler (E2W) electrification, steady passenger vehicle (EPV) penetration, and improved three-wheeler (E3W) volumes.
The E2W segment faced a sharp decline in April 2025, with sales volumes dropping by approximately 30% month-on-month (m-m) and penetration falling to 5.4% from 8.6% in March 2025. This downturn was primarily driven by a reduction in PM E-DRIVE subsidies, which decreased from Rs 5,000/kWh (capped at Rs 10,000/vehicle) in FY25 to Rs 2,500/kWh (capped at Rs 5,000/vehicle) in FY26. Despite the monthly decline, E2W volumes grew by about 40% year-on-year (y-y) due to a low base.
The report anticipates that E2W volumes will stabilize in the coming months as the market adjusts to the lower subsidies.
Electric passenger vehicle (EPV) sales showed resilience, with a 60% y-y volume increase, though they moderated by 5% m-m. Penetration remained steady at 3% in April 2025. Mahindra & Mahindra (M&M) emerged as a standout performer, boosted by its recently launched battery electric vehicles (BEVs), XEV 9e and BE 6e.
The report highlights 2025 as a pivotal year for EPV adoption, with new launches expected to bolster market growth.
The E3W segment performed strongly, with volumes rising 47% y-y and 5% m-m. Penetration improved to 61.8% from 59.3% in March 2025, reflecting growing acceptance of electric three-wheelers.
The report provides an in-depth investment analysis of Mahindra & Mahindra, rating it as "Outperform" with a target price of Rs 3,600. M&M’s success in utility vehicles (UVs) and tractors, coupled with its EV strategy, positions it for strong growth.
The reduction in PM E-DRIVE subsidies has created short-term challenges, particularly for E2Ws, but the report expects the market to adapt. The subsidy cuts apply across segments, with E3Ws and e-rickshaws also seeing reduced incentives (from Rs 5,000/kWh to Rs 2,500/kWh, capped at Rs 25,000/vehicle). Despite these challenges, the Indian EV market is poised for growth, driven by new model launches and increasing consumer acceptance.