Electric Two-Wheeler Sales to Grow 18% as Rare-Earth Supply Stabilizes

According to a CRISIL report, the Indian electric two-wheeler market is projected to witness a 16-18% growth in FY27, driven by the normalization of rare-earth magnet supplies and lower operating costs compared to petrol vehicles.

The Indian electric two-wheeler (E2W) sector is poised for a significant recovery, with sales projected to grow by 16-18% in the 2026-27 fiscal year (FY27). According to a comprehensive report by rating agency CRISIL, this anticipated surge follows a period of supply chain disruptions and subsidy adjustments. The primary catalyst for this renewed momentum is the stabilization of the supply chain for rare-earth magnets, which are critical components for electric motors, alongside the inherent cost advantages of electric mobility.

Normalization of Rare-Earth Magnet Supply Chain

The E2W industry faced substantial headwinds in the current fiscal year (FY26) due to inconsistencies in the procurement of rare-earth magnets, primarily sourced from China. These supply constraints, coupled with regulatory changes, are expected to limit growth to 12-13% in FY26. However, industry data suggests that the supply of these essential materials is now normalizing. As manufacturers secure more reliable supply lines, production capacities are expected to expand, allowing for a more consistent flow of vehicles to the market and potentially stabilizing prices for the end consumer.

Economic Viability: Comparative Analysis of Running Costs

Despite the reduction in government subsidies under various schemes, the economic proposition of electric scooters remains compelling for Indian consumers. 50 per kilometer. 30 per kilometer. 5%.

Market Dynamics: Legacy OEMs Outpace New-Age Startups

A notable shift in market leadership is currently underway within the Indian E2W landscape. Established manufacturers, often referred to as legacy players—including Bajaj Auto, TVS Motor Company, and Hero MotoCorp—have Notably increased their market dominance, while as of January 2026, these legacy OEMs collectively held a 62% market share, a substantial increase from 47% in the previous year. Analysts attribute this trend to their solid service networks and the ability to use profits from internal combustion engine (ICE) portfolios, whereas many pure-play EV startups are reportedly facing losses ranging from ₹25,000 to ₹35,000 per unit.

Industry Analysis and Future Outlook

According to analysts at CRISIL and industry experts, the E2W market is transitioning from a subsidy-led phase to a value-driven phase. While the projected 18% growth is slightly lower than the 22% peak recorded in FY25, it represents a more sustainable and mature growth trajectory. The focus is shifting toward technological reliability and infrastructure development. Experts suggest that as charging networks expand across urban and semi-urban areas, the initial 'range anxiety' among consumers is diminishing, further supporting the long-term adoption of electric mobility solutions.

To sum it all up, the convergence of improved component availability and the undeniable cost benefits of electric propulsion is setting the stage for a strong growth phase in the E2W segment. The increasing influence of established automotive brands is expected to bring further stability and consumer trust to the evolving electric vehicle ecosystem in India.