India's Electric Car Sales To Cross 7% By FY28 If Rare Earth Disruptions Eased: Report

While two-wheelers and three-wheelers continue to dominate the EV space, four-wheeled electric vehicles are now gaining substantial ground

To further reduce costs and enhance domestic capacity, the government’s latest budget eliminated basic customs duty on 16 minerals crucial to EV battery production

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India's electric vehicle (EV) market is poised for significant growth, with electric car penetration projected to exceed 7 per cent by FY28, provided supply chain disruptions—especially concerning rare earth elements (REEs)—are addressed in a timely manner. This outlook comes from a new report by CareEdge Advisory released Wednesday, coinciding with US EV giant Tesla's formal entry into the Indian market.

Electric car adoption in India has expanded exponentially in recent years. According to the CareEdge report, the segment has grown nearly 21-fold—from just over 5,000 units sold in FY21 to more than 1.07 lakh units in FY25. While two-wheelers and three-wheelers continue to dominate the EV space, four-wheeled electric vehicles are now gaining substantial ground, propelled by a combination of public policy initiatives and increased industry participation.

Policy Support And New Models To Drive Growth

“India’s electric car sales penetration is likely to cross 7 per cent by FY28, provided rare earth disruption is resolved in a timely manner. 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,” said Tanvi Shah, Senior Director and Head, CareEdge Advisory & Research.

Government measures such as the FAME III scheme, Production Linked Incentive (PLI) for advanced chemistry cell (ACC) batteries, and customs duty exemptions on essential battery minerals aim to strengthen the local supply chain and bring down production costs.

Charging Infrastructure Expands Rapidly

One of the biggest hurdles for electric car adoption—limited public charging infrastructure—is now being addressed at scale. India’s Public EV Charging Stations (EVPCS) have increased nearly fivefold, from 5,151 in 2022 to over 26,000 by early FY25. This expansion reflects a compound annual growth rate (CAGR) of more than 72 per cent.

States like Maharashtra, Delhi, Tamil Nadu, and Gujarat have introduced location-specific incentives, such as land grants and capital expenditure subsidies. Municipal bodies are also enforcing mandates for EV-ready parking in both residential and commercial projects, helping reduce range anxiety among prospective buyers.

Private Sector And Standardisation Efforts Gain Ground

Private Charge Point Operators (CPOs) are rapidly scaling operations, often in collaboration with state-run electricity boards and urban authorities through public-private partnerships. Meanwhile, national agencies like the Bureau of Energy Efficiency (BEE) and NITI Aayog are working toward charger standardisation and interoperability, ensuring ease of use across networks.

Battery Supply Chain Getting Stronger

To further reduce costs and enhance domestic capacity, the government’s latest budget eliminated basic customs duty on 16 minerals crucial to EV battery production. As a result, India’s dependency on lithium-ion cell imports could drop from nearly 100% in FY22 to just 20 per cent by FY27, CareEdge estimates, supported by new investments in battery manufacturing facilities.

With a strong policy framework, technological advancements, and Tesla’s market entry, India’s electric car ecosystem is entering a pivotal growth phase.