India’s Auto Sector Faces Shake-Up: EV Sales Surge 34% as Two-Wheelers Slip 6.2% in Q1 FY2026
India’s automotive industry is undergoing a dramatic shift as electric vehicle adoption accelerates while traditional segments show signs of slowdown. According to Deloitte India’s Wheelwatch Auto Sector Tracker (July 2025), the first quarter of FY2026 saw two-wheeler sales drop 6.2% year-on-year, while electric two-wheeler registrations jumped 34%, pushing EV penetration in the segment to 6.2%, up from 4.9% a year ago.
Electric Revolution Gains Speed
- Electric 2W Sales: +34% YoY | EV penetration at 6.2%
- Electric PV Sales: +75% YoY | EV penetration at 3.5%
- Kerala leads EV 2W adoption: 14.9% penetration, 2X national average
- Delhi, Karnataka & TN top EV PV market: >3.5% penetration each
The electric passenger vehicle (PV) market also saw a 75% surge, taking EV penetration to 3.5%, compared to just 2% in the same quarter last year.
“Urban India is rapidly shifting toward sustainable mobility, while rural demand for entry-level vehicles remains under pressure,” noted analysts tracking the data.
Traditional Segments Under Pressure
- Two-Wheelers: 4.7M units sold (-6.2% YoY)
- Motorcycles: -9.2% | Commuter bikes worst hit (-10.4%)
- Executive Motorcycles: Sharp decline amid affordability crunch
- Premium Bikes: Buck trend with +10.7% growth
- Passenger Vehicles: Slight dip (-1.4%), but mid-size cars up +14.6%
The steepest decline came from commuter motorcycles, a segment heavily dependent on rural buyers. Premium and sports motorcycles, on the other hand, recorded double-digit growth, showcasing the widening gap between value-conscious and aspirational buyers.
Policy Push Fuels EV Growth
Government incentives continue to play a vital role in driving EV adoption:
Maharashtra EV Policy Extended to 2030: Targets 30% EV penetration
Madhya Pradesh EV Policy 2025: Offers road tax & registration waivers
Centre’s EV Manufacturing Scheme: Concessional duty for $35K+ imported EVs with 50% DVA
What This Means for India’s Auto Industry
The data highlights a structural shift:
- Rural and entry-level segments under stress due to affordability issues
- Urban and premium segments growing, especially in EVs
- States with robust EV infrastructure (Kerala, Karnataka, TN) driving penetration
This mix of falling traditional sales and rising EV adoption underlines India’s transition from ICE to electric mobility, backed by policy, urban demand, and a growing ecosystem of charging infrastructure.