India's electric vehicle market showed resilience in February 2026, with penetration rates holding broadly stable across key segments even as overall registrations declined, according to a sector research report published by BNP Paribas Securities India. The report, authored by analyst Kumar Rakesh, warns however that the imminent expiry of government subsidies under the PM E-Drive scheme poses a meaningful near-term risk to the two-wheeler EV segment.

Across all vehicle categories — two-wheelers, passenger vehicles, and three-wheelers, EV registrations fell month-on-month in February, but analysts attribute this largely to calendar effects: fewer days in February compared to January, combined with an unusually strong January base. Crucially, EV penetration remained broadly flat in both the two-wheeler and passenger vehicle segments, suggesting the underlying structural shift toward electrification continues.

"Penetration was flattish m-m in EPV and E2W as the volume decline was similar to that of ICE vehicles," the report notes, pointing out that the dip was not unique to electric vehicles — combustion-engine vehicles fell by similar proportions.

Two-Wheelers

In the electric two-wheeler segment, arguably India's most strategically significant EV battleground given the country's enormous two-wheeler market, retail penetration held at 6.6% in February 2026.

The competitive dynamics, however, shifted notably. TVS Motor retained its position as the segment leader with a 28.5% market share, essentially unchanged from January. Bajaj Auto was the standout performer, gaining approximately 180 basis points month-on-month to reach a 22.8% share — its third consecutive month of improvement, per the report. Ather Energy (18.5%) and Hero MotoCorp (11.3%) posted modest gains as well.

The biggest loser was Ola Electric, which shed roughly 260 basis points of market share to fall to just 3.5% — a dramatic decline for a company that once commanded over 35% of the segment in FY24. Over a multi-year view, the data in the report tells a stark story: Ola Electric went from being the undisputed dominant player in FY24 to a distant fifth in February 2026, overtaken by TVSL, Bajaj, Ather, and Hero MotoCorp in succession.

Geographically, Kerala and Karnataka led India's states in E2W penetration at 14.2% and 12.8% respectively in February. Delhi and Uttar Pradesh saw the sharpest month-on-month declines.

The report's most urgent near-term warning concerns the PM E-Drive subsidy scheme, which is set to expire in March 2026. BNP Paribas expects this to trigger a wave of pre-buying in March as consumers rush to take advantage of incentives before they lapse — potentially flattering March registrations before a sharper correction in April.

This is not the first time India's EV market has navigated a subsidy transition. The report's charts clearly show how the reduction and eventual end of FAME II incentives created visible disruptions in E2W volumes in prior years, with sales surging ahead of expiry dates and then pulling back. The PM E-Drive expiry sets up a similar dynamic, and investors and OEMs are being put on notice.

Passenger Vehicles

In the electric passenger vehicle (EPV) segment, penetration held steady at 3.5% in February even as overall sales contracted sharply — down roughly 24–25% month-on-month for both EVs and ICE vehicles alike. There were no major new model launches to drive incremental demand.

Mahindra & Mahindra (M&M) was the month's winner in this segment, gaining approximately 150 basis points of market share to reach 22%, aided by healthy customer response to its new XEV 9S model. This came despite M&M's own sales declining around 18% in the month — a reflection of how much steeper the falls were for its rivals.

Tata Motors PV, which remains the dominant force in India's EPV market with roughly 42% market share on a year-to-date basis, saw its monthly share dip by about 290 basis points to 41.8% in February. The report attributes this partly to the company prioritizing dispatches of its Sierra model over EV variants. MG Motor also shed ground, with its share declining 121 basis points to 24.9%.

A noteworthy development in February: Maruti Suzuki — India's largest carmaker by volume — officially announced pricing for its first-ever EV product, marking its formal entry into the electric passenger vehicle space. The BNP Paribas report, however, tempers expectations, stating it does not anticipate material changes in EPV penetration as a direct result of the launch, at least in the near term.

Looking ahead, the report flags a significant pipeline of new EPV launches expected in 2026, including the Tata Motors Sierra EV, the Tata Avinya, Kia's Syros, Skoda's Elroq, and two models from Vietnamese automaker VinFast — the Limo Green and VF3. The cumulative effect of these launches could meaningfully accelerate EPV penetration through the year.

Geographically, Delhi led all states in EPV penetration in February at an impressive 8.5%, followed by Kerala (6.7%) and Karnataka (5.4%). The national average stood at 3.5%.

Three-Wheelers

The electric three-wheeler (E3W) segment had a difficult February. Registrations fell roughly 22% month-on-month, while ICE three-wheelers declined only about 14%, causing EV penetration in the segment to contract by approximately 5 percentage points to 54% — still the highest electrification rate of any vehicle category in India, reflecting the strong commercial economics of electric three-wheelers for last-mile logistics and passenger transport.

Bajaj Auto led in February volumes (6,934 units) followed closely by Mahindra & Mahindra (6,463 units). On a year-to-date FY26 basis, M&M continues to hold the segment lead.

State-level data revealed extreme variation. West Bengal topped the chart at 93% E3W penetration in February, followed by Uttar Pradesh at 87.5% and Bihar at 75.9%. At the other end, Gujarat stood at just 5.9% and Karnataka at 8.3%, suggesting substantial room for electrification growth in southern and western India's three-wheeler markets.

CNG and Hybrids

Not all the momentum in India's cleaner vehicle transition belongs to pure electrics. CNG passenger vehicles saw penetration tick up marginally to 24% in February — its highest level yet — with Maruti Suzuki holding a dominant 70% share of the CNG PV market, though it ceded some ground month-on-month. Tata Motors PV gained about 210 basis points to reach an 18% CNG share, benefiting from a softer sales decline relative to peers.

Hybrid vehicles continued to hold steady at 2.2% penetration, with Toyota commanding approximately 82% of the hybrid PV segment — gaining nearly 790 basis points month-on-month — while Maruti Suzuki's hybrid share contracted to around 17%.

Beyond the month's data, the BNP Paribas report provides a broader framework for tracking the evolution of India's EV industry, with the thesis that value will be redistributed among auto OEMs "in this decade" as electrification accelerates.

The stocks covered in the report reflect a nuanced view. Maruti Suzuki carries the highest target price upside at 41%, rated Outperform, while Mahindra (rated Outperform, 30% upside) and Eicher Motors (Outperform, 14% upside) are also viewed favorably. TVS Motor is the only stock carrying an Underperform rating, with a target price implying roughly 40% downside from current levels — a notable call given TVSL's current leadership in the E2W segment.