Demand for EVs rises in May as fuel prices go up amid Iran war

India’s electric vehicle market saw strong growth in May as rising fuel prices encouraged consumers to switch to EVs. Electric car and two-wheeler sales gained market share, with manufacturers benefiting from increased demand, supportive policies, and growing consumer acceptance

New Delhi: India’s electric vehicle (EV) market registered an increase in demand during May this year, as higher fuel prices pushed more buyers towards battery-powered alternatives, according to reports by Nomura and HSBC.

According to Nomura, EV sales in May reached 6.4 per cent of passenger vehicle sales, compared with 4 per cent in FY26, while electric two-wheelers accounted for 8.9 per cent of sales, up from around 6.5 per cent last year.

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The brokerage said that demand sentiment shifted more towards EVs which is continuing to gain traction. Similarly, an HSBC report said, “The recent hikes in fuel prices has led to customer demand to incline towards purchasing an electric vehicle.”

The brokerage estimated electric two-wheeler penetration at 9.3 per cent and electric passenger vehicle penetration at 6.6 per cent in May. Among carmakers, Tata Motors continued to be the major beneficiary due to the surge in demand for electric cars.

The company reported an 85 per cent year-on-year increase in EV sales, while EV bookings have grown 2.5 times over the past two months.

According to Nomura, Tata Motors is seeing particularly strong demand in the segment that costs below Rs 15 lakh and plans to increase EV production capacity from 10,000 units a month to 15,000 units. The shift was even more pronounced in the two-wheeler segment.

TVS Motor remained the market leader with around 42,000 electric scooter registrations in May, followed by Bajaj Auto and Ather Energy. Ather’s sales more than doubled year-on-year, helping the company gain a market share of 16.5 per cent, the Nomura report states.

While rising commodity costs remain a concern for manufacturers, both brokerages believe the demand for electric vehicles is gathering momentum.

Nomura is of the view that “EVs are at an inflection point” in the Indian market, supported by favourable policy measures and growing consumer acceptance. The oil marketing companies raised petrol and diesel prices by around Rs 8 per litre over a two-week period in April.

The Indian crude basket, which determines domestic fuel pricing, remained above $100 per barrel for three consecutive months in May, over the prolonged Middle East crisis that has led to a choking of Strait of Hormuz, through which 20 per cent of the world’s oil and gas exports transit.

The continued vacillations in the peace negotiations between the US and Iran amid regular breaches of the ceasefire has led to more uncertainty and expectations of further rise in oil prices.

Indian oil companies are still losing Rs 550 crore a day on the sale of petroleum products as the government has reined in price hikes to protect consumers.