Electric two-wheelers will continue to anchor electric vehicle (EV) adoption in India, while passenger cars are set to emerge as the fastest-growing segment from 2026, according to a recent assessment by Capgemini. The consulting firm said strong total cost of ownership benefits, improving charging access and rapid digitisation of vehicles will drive the next phase of EV growth across regions and city tiers.
“Globally, passenger cars will still dominate EV volumes, but in markets like India the deepest penetration will come from two- and three-wheelers and last-mile commercial vehicles,” said Anuraag Bharadwaj, Industry Platform Leader for Automotive – India at Capgemini. “These segments are best suited for electrification because of their economics, limited charging needs and alignment with urban mobility patterns.”
In India, electric two-wheelers will remain the backbone of EV adoption due to their affordability and daily-use economics. At the same time, passenger EVs are expected to see sharp year-on-year growth as charging infrastructure expands and product options widen across cities.
Beyond the Sale
Technology is also reshaping the two-wheeler segment. Digital display clusters are increasingly mirroring car infotainment systems, offering connected features such as navigation, diagnostics and content playback. Alongside this, software-defined vehicles (SDVs) are beginning to alter OEM business models in India. “OEMs are clearly looking beyond one-time vehicle sales,” Bharadwaj said. “Subscriptions, connected services and feature-led monetisation will become increasingly important revenue streams as consumers become more value-conscious.”
Profitability Gap
However, even as adoption accelerates, Capgemini cautioned that EV profitability in India remains constrained by weak battery localisation. Batteries account for nearly 40% of an EV’s total cost, making them the most expensive component. While localisation has improved in vehicle assembly and electronics integration, domestic battery cell manufacturing remains limited, forcing automakers to rely on imports from China and other markets.
“Battery localisation is not just a manufacturing challenge—it is a strategic imperative,” Bharadwaj said. “Electrification has moved firmly into the mainstream, but battery localisation has not kept pace. Without a strong domestic ecosystem for cell manufacturing and raw material processing, EV profitability in India will remain structurally constrained.” In the interim, mainstream automakers such as Mahindra are sourcing advanced battery technologies like Blade cells from BYD, a configuration expected in upcoming models including the Maruti eVitara and the Toyota Urban Cruiser EV.
Government incentives under the Production Linked Incentive scheme for Advanced Chemistry Cell batteries have triggered gigafactory announcements, but Capgemini said their impact on vehicle costs will be felt only over the medium term. “Whoever cracks scale, cost efficiency and supply resilience in batteries will define the next phase of EV leadership in India,” Bharadwaj said.