Auto majors allay fear over slowing EV adoption after tax cut for traditional cars

Data from the Federation of Automobile Dealers Association (Fada) data released on Tuesday showed EV penetration grew for two consecutive months after a dip in October, leading to fears that New Delhi’s move to cut tax on ICE vehicles could hurt EV penetration in the long run, as the fossil-fuelled ones were already much cheaper in the price-sensitive Indian market.“Electric vehicle sales are here to stay. There was softening in the last few months, but penetration levels have grown in 2025.

EV car penetration grew from 2.5% to nearly 4% last year,” C.S. Vigneshwar, president of Fada, told Mint.While EV penetration, the percentage of EVs of total passenger vehicle sales, in the car market fell from 5.14% in September to 3.26% in October, the number recouped to 3.75% in November and 3.94% in December, retail data released by Fada showed.The dip in October had made some market observers note that consumer interest had softened in EVs after GST cuts narrowed the tax gap between ICE vehicles and EVs, making the former even more attractive for buyers.

An EV passenger vehicle would typically cost ₹2,00,000-4,00,000 more.In September, the government cut GST for petrol and diesel vehicles from the earlier rates of 28% on small cars and 45-50% on large cars to 18% and 40%, respectively. The tax rate for EVs remained at 5%.Both Tata Motors Passenger Vehicles Ltd, Mahindra & Mahindra Ltd reiterated that there were no alarm bells for the EV vehicles' growth trajectory due to the reduction in prices of ICE vehicles, a position reiterated by the Fada chief.

During a press briefing in December, Tata Motors PV managing director and chief executive officer Shailesh Chandra said there was no cause for alarm for EV penetration for now even