New Delhi: Rapid growth in electric vehicle (EV) adoption across key city gas markets is beginning to erode the market share of compressed natural gas (CNG) vehicles and could weigh on long-term piped natural gas (PNG) demand, according to a report by brokerage firm Dolat Capital, ANI reported.
The report said EV registrations have accelerated sharply during the first half of calendar year 2026, outpacing CNG adoption in some geographical areas served by Mahanagar Gas Ltd (MGL), Indraprastha Gas Ltd (IGL) and Gujarat Energy Ltd.
“The pace of EV registrations has improved significantly in the first half of 2026 and, in some geographical areas, has surpassed CNG,” the brokerage said.
The shift has been most visible in MGL’s operating areas, where EV adoption increased by 470 basis points between February and June 2026, while CNG adoption declined by 422 basis points over the same period.
In Mumbai, EV registrations reached a record level in June, with adoption rising to 11.3%. During the same month, CNG vehicles accounted for 37% of registrations. However, the average CNG adoption rate during the first half of 2026 fell to 37.6%, compared with 45.6% in the corresponding period last year.
Delhi is also witnessing a steady rise in EV adoption. According to the report, EVs accounted for 24% of vehicle registrations in June 2026, while CNG adoption stood at 33%.
Dolat Capital said the proposed Delhi EV Policy 2.0 could further impact CNG demand by ending the registration of new CNG auto-rickshaws after December 31, 2026, and prohibiting the registration of new petrol, diesel and CNG two-wheelers after March 31, 2028. The brokerage estimates the policy could result in a long-term CNG volume loss of 0.08 million standard cubic metres per day (mmscmd) for IGL.
Despite the growing popularity of EVs, the report expects CNG sales volumes to continue rising in the near term if current registration trends persist. It projects an additional 0.3 mmscmd increase in CNG volumes for MGL over the next 12 months, representing about 9% growth. Similar increases of 0.66 mmscmd (around 8%) for IGL and 0.51 mmscmd (about 17%) for Gujarat Energy are also expected.
According to ANI, On the PNG front, the brokerage said competition from propane is intensifying, particularly in Gujarat’s Morbi industrial cluster. Around 25 to 30 industrial units are preparing to switch from PNG to propane, which is expected to be priced about ₹5 per standard cubic metre lower than PNG during July.
In response, Gujarat Energy plans to reduce PNG prices by ₹2 per standard cubic metre in early July, followed by another ₹4 per standard cubic metre cut later in the month.
While Dolat Capital expects the company to maintain gross margins of around ₹6 per standard cubic metre in its PNG business after the price reduction, it warned that softer crude oil and spot liquefied natural gas (LNG) prices could lead to further price cuts.
The brokerage concluded that city gas distribution companies face increasing pressure from both rising EV adoption and lower-priced propane, creating challenges for future demand growth as well as pricing.
