Electric vehicle (EV) sales continue to rise in absolute terms, but the pace of growth is slowing sharply, signalling a transition from an early-stage boom to a more mature phase of adoption. Retail data for the past five years shows that while volumes have expanded steadily, year-on-year growth has decelerated consistently since peaking in 2022.
Electric Vehicle sales
EV sales stood at 2.22 million units in 2025, up from 1.95 million units in 2024, marking a growth of 13.7%. This represents a sharp moderation compared with the 27.3% growth recorded in 2024, when sales rose to 1.95 million units from 1.53 million units in 2023.
The slowdown becomes even more evident when compared with the 49.5% growth recorded in 2023 over 2022. However, the most significant surge occurred in 2022, when the industry crossed the one-million mark, registering a 208% increase from 331,723 units in 2021.
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Reason for the decline in market
According to sector experts, the decline in incentives for electric vehicles , coupled with the slow pace of charging infrastructure development, has weighed on market momentum. This has been further exacerbated by negative consumer sentiment following product quality issues at Ola Electric, the country’s largest electric two-wheeler manufacturer, which has eroded customer confidence. Additionally, GST reductions have shifted consumer preference toward internal combustion engine (ICE) vehicles, boosting ICE sales during the festive season of 2025 while EVs took a back seat.
A major factor behind this slowdown is the sharp reduction in incentives following the expiry of the FAME-II scheme. Under the new PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, incentives for electric two-wheelers (e2Ws) have been slashed by 85% to ₹10,000, compared to ₹66,000 under FAME-II in 2022. Similarly, subsidies for electric three-wheelers (e3Ws) have declined by 35% to ₹50,000 from ₹1,11,505 earlier.
Further cuts came in April 2025 with incentives falling to ₹5,000 for e2Ws and ₹25,000 for e3Ws. Electric cars have been excluded from the subsidy framework altogether, further dampening growth prospects for the segment.
The explosive growth in 2022 came on the back of strong government incentives, rising fuel prices, and rapid electrification of two- and three-wheelers. That momentum carried into 2023 and 2024, though at progressively lower growth rates as the base expanded and subsidy structures began to change.
Moreover, automakers are also recalibrating their EV strategies. Several manufacturers have shifted focus from aggressive volume expansion to improving profitability, localisation, and product quality. This has led to fewer deep discounts and a more measured rollout of new models, especially in the passenger vehicle segment.
Despite the slowdown in growth, the long-term outlook for EVs remains positive. Sales in 2025 are nearly seven times higher than in 2021, when volumes stood at just over 331,000 units.
