Alternative-fuel vehicles accounted for more than 40% of passenger vehicle retail sales in India for the first time in June, as rising petrol and diesel prices prompted consumers to shift towards electric vehicles (EVs), hybrids and compressed natural gas (CNG) models.
According to the Federation of Automobile Dealers Associations (FADA), overall automobile retail sales rose 22% in June, with alternative-fuel vehicles accounting for over 40% of passenger vehicle sales, up from around 38% in May. CNG vehicles led the segment with a 24.3% share, followed by hybrids at 8.3% and EVs at 7.8%, The Indian Express reported.
The shift comes amid higher fuel prices and inflationary pressures following the West Asia conflict, which has pushed petrol and diesel prices up by ₹7-11 per litre across cities since February, making lower running-cost alternatives more attractive.
Around 63% of EV sales in June came from the two-wheeler segment, while passenger cars accounted for only about 10%, according to FADA data.
Besides lower fuel costs, EVs offer reduced maintenance expenses and registration tax benefits, with several state governments providing incentives for electric vehicle buyers. However, hybrid vehicle sales continue to lag because of higher taxation. EVs attract a 5% Goods and Services Tax (GST), while hybrids are taxed at 40-48%, similar to conventional internal combustion engine (ICE) vehicles.
Analysts said rising fuel prices have become the biggest catalyst for EV adoption despite higher upfront purchase costs.
Ravi Gupta, an analyst at InCred Capital, said charging infrastructure is not a major constraint for most passenger EV owners as they typically charge their vehicles at home and mainly use them for city commuting.
According to Nomura, EV penetration in the passenger vehicle segment increased to 7.5% in June from 4% at the end of the January-March quarter, surpassing the pace of growth recorded during the previous financial year.
Tata Motors reported its highest-ever monthly electric passenger vehicle sales in June, with volumes rising 183% year-on-year to nearly 15,000 units, significantly outpacing the broader passenger vehicle market. The company, along with Maruti Suzuki, has introduced new EV models this year, with additional launches planned.
Industry analysts said the strongest momentum continues to come from electric two-wheelers, where limited travel distances and improved battery performance have made EVs increasingly practical for urban commuters.
Electric two-wheeler penetration rose to 10.6% in June from 7.7% at the end of FY26. Bajaj Auto reported nearly 70% growth in electric two-wheeler sales compared with overall two-wheeler growth of 14%, while TVS Motor posted an 86% increase in electric two-wheeler sales during the first quarter, saying demand is expanding beyond early adopters to mainstream buyers.
Tata Motors continues to lead the electric passenger vehicle market with around 40% market share, while TVS Motor and Bajaj Auto each hold about 25% of the electric two-wheeler market.
Automakers are expanding manufacturing capacity to meet rising demand. Bajaj Auto plans to increase monthly production capacity for its Chetak electric scooter from 50,000 units to 60,000 units. TVS Motor is raising electric two-wheeler capacity from 40,000 to 50,000 units per month and electric three-wheeler capacity from 20,000 to 30,000 units.
India’s charging infrastructure has also expanded steadily. According to the Press Information Bureau, the country now has 52,718 public EV charging stations, including 16,561 fast chargers for electric cars. Although India still has around 235 EVs per public charger—well above the global average of 6-20—coverage is improving across major cities, smaller towns and highways.
Government incentives have also supported EV adoption through schemes such as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) programme and the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) scheme launched in 2024.
A study by the Council on Energy, Environment and Water (CEEW) estimated that electric passenger vehicles can reduce ownership costs by around 20% over five to eight years for individual buyers and by 35-40% for fleet operators despite their higher purchase prices.
Bajaj Auto Executive Director Rakesh Sharma said operating cost advantages continue to drive consumer interest in EVs as fuel prices remain elevated. Tata Motors Managing Director and Chief Executive Officer Shailesh Chandra also recently said the West Asia crisis has accelerated customer acceptance of electric vehicles.
