Crisil Ratings expects the electric vehicle push to absorb about Rs 240 bn of the roughly Rs 600 bn capital expenditure planned by passenger vehicle makers over this fiscal and the next, signalling a structural shift in India’s car market. The agency said manufacturers are preparing to expand electric four-wheeler (E4W) portfolios and production capacity.

The report said E4W adoption is gathering pace despite charging and near-term profitability challenges, with investments in portfolio expansion, supply chain localisation and EV production. Average monthly E4W volumes rose around 40 per cent to about 26,000 units in the three months ended May 2026, and penetration increased to six point one per cent from the fiscal 2026 average of four point six per cent. Crisil said the investment push reflects improving ownership economics and wider product choices.

Crisil director Anand Kulkarni noted that over 40 per cent of the capex outlay was estimated for EV related expansion. The agency observed that a goods and services tax reduction on internal combustion engine vehicles in September 2025 temporarily narrowed the total cost of ownership advantage of E4Ws but that the long term growth trajectory remained intact.

The report projected E4W volumes could more than double to about 0.5 mn units by the next fiscal from roughly 0.22 mn last fiscal, raising penetration to eight to 10 per cent. It identified model availability, range improvements and ownership economics as key drivers, and noted that model counts had doubled to around 20 and could exceed 35 by the next fiscal. The agency cautioned that higher EV sales may not immediately boost automaker profitability and said localisation, charging expansion and policy continuity would be critical.