India’s Electric Car Penetration Likely to Cross 7% by FY28 — Can Policy Push and Tesla's Entry Deliver on the Promise?
India's electric vehicle (EV) journey is no longer a matter of speculation — it is becoming a visible transformation. A recent report by CareEdge Advisory & Research indicates that the country is set to achieve over 7% electric car penetration by FY28, a substantial leap considering the nascent stage of this segment just a few years ago. The projection, however, hinges critically on the timely resolution of rare earth element (REE) disruptions, a pressing supply-chain issue that can either fast-track or stall progress.
In a sector long dominated by two- and three-wheelers, the electric four-wheeler segment is finally entering a high-growth trajectory, backed by sustained policy interventions, rising consumer interest, and international participation — most notably, the entry of US-based EV giant Tesla.
From 5,000 to Over 1 Lakh Units: A Shift in Pace
India’s electric car segment has scaled impressively from just 5,000 units in FY21 to over 1.07 lakh units in FY25 — a 21-fold jump in four years. This growth is not merely numerical; it represents a growing trust among Indian consumers toward EVs as a viable alternative to traditional internal combustion engine (ICE) vehicles.
This confidence is also reflected in the policy landscape. The government’s target of 30% EV penetration by FY30 is not an ambitious pipedream but a strategic national commitment. Policy frameworks such as FAME III, the Production Linked Incentive (PLI) Scheme for advanced chemistry cell (ACC) batteries, and exemptions on basic customs duties for crucial minerals like cobalt, lithium-ion waste, and graphite are reshaping the economic equation for EV manufacturing.
Charging Ahead: Infrastructure Expands, Range Anxiety Shrinks
Historically, inadequate charging infrastructure has been a major bottleneck for EV adoption in India. However, the pace of development in recent years is impressive. The number of public EV charging stations has grown five-fold from 5,151 in 2022 to over 26,000 in early FY25, marking a 72% CAGR.
The Centre and state governments have been proactive. While FAME III allocates dedicated funds for EV charging, states like Maharashtra, Delhi, Tamil Nadu, and Gujarat are offering land subsidies, capex support, and mandating EV-ready parking infrastructure in new developments. These structural reforms aim to ensure availability of a charging station every 5–10 km in urban areas, tackling the “range anxiety” issue head-on.
Additionally, private charge point operators (CPOs) are aggressively expanding their footprint, often in PPP models with DISCOMs and municipalities, enhancing the pace and reach of the network.
A Critical Pivot: Battery Localisation and Rare Earth Dependency
Perhaps the most decisive variable in India's EV transition is its control over the supply chain for EV batteries. The nation has made commendable progress — the dependency on lithium-ion cell imports is expected to decline from nearly 100% in FY22 to just 20% by FY27, thanks to domestic investments in battery production under the PLI scheme.
The FY26 Union Budget’s decision to introduce zero basic customs duty on 16 key battery minerals is a masterstroke, aiming to reduce costs while insulating the industry from international supply shocks. Yet, rare earth disruptions remain a concern. The availability and processing of elements like neodymium and dysprosium, essential for EV motors and batteries, must be addressed urgently to ensure uninterrupted growth.
Tesla’s Arrival: Catalyst or Disruption?
Tesla's formal entry into India signals more than just the arrival of a global EV brand. It is expected to set a new benchmark in technological standards, design, and efficiency, likely forcing Indian automakers to up their game. Tesla's presence also increases global investor interest in the Indian EV ecosystem, from charging infrastructure to battery tech startups.
However, it also raises questions about market dynamics. Will Tesla cannibalise the premium segment before domestic players like Tata, Mahindra, and Hyundai can fully scale? Or will it expand the market pie for all?
Standardisation and Interoperability: The Next Step
To sustain this growth, India must now streamline its EV ecosystem through standardisation. The Bureau of Energy Efficiency (BEE) and NITI Aayog are rightly focusing on developing uniform charging protocols, which are essential for user convenience and long-term sustainability.
Without standard connectors, software protocols, and tariff models, the consumer experience will remain fragmented, slowing down adoption despite infrastructural availability.
Final Thoughts from The Trending People
India’s electric car segment stands at a critical inflection point. The groundwork — from policy frameworks to infrastructure to manufacturing capabilities — is being laid with care and clarity. The next three years will determine whether India can leapfrog into the global EV elite or remain a market of missed opportunities.
The 7% penetration target by FY28 is achievable, but it will require resolute implementation, private-sector collaboration, and geopolitical preparedness on raw materials. With Tesla’s entry, the EV conversation in India is no longer hypothetical — it is happening, and it’s gaining speed.