EV Capex To Absorb Rs 240 bn As Electric Car Adoption Grows

22 Jun 2026 CW Team

The report said electric four-wheeler (E4W) adoption is gathering pace despite challenges in charging infrastructure and near-term profitability, with manufacturers increasing investments in portfolio expansion, supply chain localisation and EV production capacity. Anand Kulkarni, director at Crisil Ratings, noted that over 40 per cent of the capex outlay is estimated for these areas.

Crisil reported that average monthly E4W volumes rose about 40 per cent to 26,000 units in the three months ended May 2026 and penetration climbed to 6.1 per cent from the fiscal 2026 average of 4.6 per cent. The firm said a temporary reduction in goods and services tax on internal combustion engine vehicles in September 2025 narrowed the total cost of ownership advantage of E4Ws and moderated growth, but long-term trajectory remains intact. Manish Gupta, senior director and deputy chief ratings officer at Crisil Ratings, projected volumes could more than double to about 0.5 mn units by next fiscal from about 0.22 mn last fiscal, lifting penetration to eight to 10 per cent.

The report identified rapid model availability, improved driving range and better ownership economics as key drivers and noted model count has doubled to around 20 and may exceed 35 by next fiscal with launches planned in the sub-Rs 1.5 mn segment. Premium electric vehicles now offer 500-700 kilometre (km) range per charge while mid-range models offer 300-450 km, and acquisition costs have declined by 10-15 per cent over the past two fiscals. Crisil cautioned that higher E4W sales may not immediately strengthen profitability for original equipment manufacturers as limited scale and high initial fixed costs could be margin dilutive in the near term, with margins expected to improve as volumes rise and operating leverage builds.

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A Crisil Ratings report said more than Rs 240 bn of the Rs 600 bn capital expenditure planned by passenger vehicle makers over this fiscal and next will be directed towards electric vehicle expansion, signalling a structural shift in India’s car market. The agency said the investment indicates electric models are moving beyond niche status. The report said electric four-wheeler (E4W) adoption is gathering pace despite challenges in charging infrastructure and near-term profitability, with manufacturers increasing investments in portfolio expansion, supply chain localisation and EV production capacity. Anand Kulkarni, director at Crisil Ratings, noted that over 40 per cent of the capex outlay is estimated for these areas. Crisil reported that average monthly E4W volumes rose about 40 per cent to 26,000 units in the three months ended May 2026 and penetration climbed to 6.1 per cent from the fiscal 2026 average of 4.6 per cent. The firm said a temporary reduction in goods and services tax on internal combustion engine vehicles in September 2025 narrowed the total cost of ownership advantage of E4Ws and moderated growth, but long-term trajectory remains intact. Manish Gupta, senior director and deputy chief ratings officer at Crisil Ratings, projected volumes could more than double to about 0.5 mn units by next fiscal from about 0.22 mn last fiscal, lifting penetration to eight to 10 per cent. The report identified rapid model availability, improved driving range and better ownership economics as key drivers and noted model count has doubled to around 20 and may exceed 35 by next fiscal with launches planned in the sub-Rs 1.5 mn segment. Premium electric vehicles now offer 500-700 kilometre (km) range per charge while mid-range models offer 300-450 km, and acquisition costs have declined by 10-15 per cent over the past two fiscals. Crisil cautioned that higher E4W sales may not immediately strengthen profitability for original equipment manufacturers as limited scale and high initial fixed costs could be margin dilutive in the near term, with margins expected to improve as volumes rise and operating leverage builds.

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