Can India Become the World’s EV Factory?

India has just rolled out a bold EV manufacturing policy that could reshape its role in the global auto industry. By offering duty cuts in exchange for local investment, the government is betting big on turning India into a global EV factory — and global automakers are taking note. As FY25 closes, this shift in policy sets the tone for a pivotal FY26 across the EV value chain.

The Indian electric vehicle (EV) industry continues to evolve rapidly, marked by strong policy support, intensifying competition, and significant shifts in market share across both traditional and new players. As we step into FY26, several trends across OEMs, component makers, and battery players reflect both the momentum and the complexities of this transformation.

🚗 Passenger EV Market: Volume Gains, Margin Pressures

Tata Motors (TTMT PV)

Tata remains the EV volume leader, but FY25 saw its market share decline from 73% to 55% due to intensifying competition. EV volumes fell 13% YoY, despite margin improvement to 1.2% (from -7.1%), aided by ₹250 crore in PLI incentives. Upcoming launches like the Sierra EV, Curvv, and Nexon CNG aim to revive momentum.

Mahindra & Mahindra

Mahindra made a strong push in EVs, capturing 37.2% of e-SUV and 33.1% of e-PV market share in Q4. Yet, delivery timelines remain long (~4 months), largely due to software upgrades and operational bottlenecks. Management targets 5 BEV launches by 2030 and expects PLI benefits to kick in from FY26.

Hyundai

EV plans are gaining traction with 6 EV models expected by FY30. Despite a flat FY25, Hyundai plans to scale aggressively once its Pune plant becomes operational in Q3FY26.

🚚 Commercial Vehicles: Transition to Clean Mobility Has Begun

Ashok Leyland

Leads India’s EV truck market with the broadest portfolio. Despite weak demand post PM e-Drive withdrawal, it is investing in hydrogen ICE, LNG, and battery tech. Its EV arm, Switch India, reported a 12% EBITDA margin in Q4, with 287 e-buses and 200 e-LCVs sold.

Eicher Motors (VECV)

VECV is ramping up its clean mobility presence. Capex of ₹1,200–1,300 crore in FY26 includes EV development.

Tube Investments (TI Clean Mobility)

One of the most aggressive new entrants in EV 3Ws and SCVs. EV revenue grew 117% in FY25 with 7,334 units sold, and the company expects EBITDA break-even in FY26.

🛵 Two-Wheelers: EV Disruption Reshaping the Landscape

TVS Motors

EV penetration is rising, with the iQube now India’s #2 electric 2W brand. FY25 margin improved to 12.3%, although the EV ramp-up is margin-dilutive in the near term. Capex of ₹1,800 crore reflects TVS’s commitment to tech-agnostic mobility.

Hero MotoCorp

Plans to launch two affordable EVs by July 2025. It also acquired a 34.1% stake in Euler Motors to tap into the ₹17,000 crore electric 3W opportunity with expected 20%+ EBITDA margins.

🔋 Battery and Component Ecosystem: Scaling Up for the EV Boom

Sona BLW

EV revenue rose 38% YoY; EVs now make up 36% of overall revenue. With an order backlog of ₹2.42 lakh crore—77% EV-focused—Sona is doubling down on this transition. Strategic moves include a ₹1,600 crore acquisition of Escorts RED (rail systems) and a Mexico plant setup despite U.S. tariff headwinds.

Exide Industries

Invested ₹3,600 crore in a 6 GWh lithium-ion cell plant, expected to begin trial production in CY25. The company is in advanced talks with OEMs for EV cell supply contracts.

Uno Minda

Expanding its EV parts portfolio through a JV with Shuzhou Innovations. Approved a ₹420 crore investment in a new powertrain plant, with Phase 1 going live by Q2FY27.

Endurance Tech

Maxwell, its EV subsidiary, achieved EBITDA break-even in Q4. Endurance has secured ₹300 crore battery pack orders from a 2W OEM and is entering 4W suspension and braking systems via global tie-ups.

📉 Headwinds and Caution Flags

• Tata JLR profitability was impacted by rising variable marketing and warranty costs.
  
• TVS and Hero face margin dilution from EV operations.
  
• SFL faces delays in EV export orders amid U.S. policy uncertainty.

🏛️ Policy Spotlight: India’s Flagship EV Manufacturing Scheme

To attract global automakers and deepen local manufacturing, the Indian government has rolled out its marquee ‘Scheme to Promote Manufacturing of Electric Cars in India’. Key highlights include:

• Import Duty Cut: EV makers investing $500 million (₹4,150 crore) to set up a local plant within 3 years can import up to 8,000 EVs annually at a 15% import duty (vs 70–100%) for 5 years.
  
• Eligibility: EVs must be priced at $35,000 or more, and the manufacturer must have global revenue of at least ₹10,000 crore and capex of ₹3,000 crore.
  
• Localisation Targets: 25% localisation within 3 years, and 50% within 5 years.
  
• Investment Rules: Land cost isn’t counted, but construction (up to 10%) and charging infrastructure (up to 5%) are allowed as part of the initial investment.
  
• Total Duty Benefit Cap: ₹6,484 crore.
  

This policy opens the door for global brands like Tesla, VinFast, Hyundai, and VW Group to enter or scale up in India with a manufacturing-first strategy, aligning with India’s goal to become an export hub for clean mobility.

🧭 Conclusion: Scaling the EV Curve

India’s EV industry is entering its next phase—marked not just by volume growth, but by maturing business models, sharper capital allocation, and rising global relevance. From Tata’s EV leadership to Sona’s supply-chain scale-up, Mahindra’s aggressive ramp-up to Ashok Leyland’s clean truck portfolio—every major player is aligning their strategy with the EV megatrend.

What adds further momentum is the central government’s newly notified EV manufacturing policy, which offers significant import duty relief in exchange for committed local investments. With provisions like reduced 15% import duty on high-end EVs, localisation milestones, and a clear investment roadmap, this scheme has the potential to attract global giants and accelerate India’s journey as a global EV manufacturing hub.

FY26 will be a pivotal year—as regulatory clarity, infrastructure rollout, new product launches, and now policy-driven investments converge to reshape the future of India’s mobility landscape.

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