CareEdge: EV Car Uptake Could Hit 7% by FY28 With Supply Chain Fixes

Electric mobility is set to bring the next wave of transformation into the automobile industry, with electric bus sales reaching 100,000 units across dealerships in FY25, according to CareEdge Research. Nationwide, electric vehicle (EV) growth surged at a compound annual growth rate (CAGR) of 80% over FY22, the report noted.

Advertisment

This growth is facilitated by a gradual yet steady shift in consumer acceptance of electric mobility, especially in urban centres. The CareEdge report noted, "The electric cars' penetration rose from 1% to 2.6%. However, it showed slower adoption compared to 2W (6.1%). The relatively low penetration in the electric car segment suggests barriers such as higher upfront costs, limited model availability, and a lack of charging infrastructure."

CareEdge Research’s View 

India's electric car ecosystem is at a pivotal juncture, showing strong early momentum backed by policy support, expanding charging infrastructure, and growing consumer awareness. While challenges like high upfront costs, limited charging networks, and reliance on imported components persist, the coordinated efforts of the government and industry players are paving the way for steady progress.

Advertisment

Tanvi Shah, Senior Director & Head, CareEdge Advisory & Research, said, “India’s electric car sales penetration is likely to cross 7% 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.”

Lower Battery Costs To Aid EV push

Battery Packs, the most pivotal component in EVs, constitute 35–45% of the cost of an electric vehicle, and battery cells presently are imported, primarily from countries such as China, South Korea, and Japan. However, CareEdge expects India’s import dependency to decline to ~20% by FY27, despite significant growth in demand due to large-scale integrated capacities being built for Li-ion battery storage.

"In its budget for fiscal year 2025–26 presented Feb. 1, the government exempted key materials such as cobalt powder, lithium-ion battery waste and scrap, lead, zinc, and 12 other critical minerals from basic customs duty," the research mentioned. 

According to projections from the study, "These materials account for approximately 40% of the total cost of an electric car. As localized production scales up, economies of scale and supply chain integration are expected to bring down battery costs in the next three to five years."

China’s REE Curbs Hit EV Output 

Based on the latest projections shared in the research, China has recently placed strict export restrictions on seven rare earth elements (REEs), which are crucial for making high-performance magnets used in electric motors and various automotive systems. India’s import dependency on China for rare earth permanent magnet remained as high as 90% during FY24 & FY25. The impact of these restrictions is expected to ripple across electric, ICE, and hybrid vehicles." 

The research explained, "The EVs production is vulnerable to access to REEs. It's used in automotive components, including electric motors, battery management systems, catalytic converters, infotainment systems, power steering, brake-by-wire systems, and advanced safety sensors. China's latest REE curb has disrupted global supply chains, especially affecting countries like India that depend heavily on these imports."