India Electric Two-Wheeler Growth to Reach 16-18% Next Fiscal ON Cost Advantage, Improved Rare-Earth Magnet Supply: CRISIL Ratings

MUMBAI: India’s electric two-wheeler (E2W) growth is projected to hit 16-18% in the next fiscal, supported by a structural ownership-cost advantage and stabilizing supply of rare-earth magnets, according to an analysis from CRISIL Ratings.This rebound comes after a period of moderation in the current fiscal where the growth slowed to 12-13% due to disruptions in the supply of rare-earth magnets and shifting tax policies, down from nearly 22% in the last fiscal.

E2W adoption continues to be supported by strong vehicle economics. While GST rate cuts have reduced the purchase cost of ICE vehicles, running costs favour E2Ws, at ₹0.3/km versus ₹2.0-2.5/km for ICE, continuing their advantage in total cost of ownership even as subsidies taper, the analysis stated.
“The supply disruption caused by shortage of rare-earth magnets had weighed on E2W volumes around mid-year. As availability began to ease, coinciding with the GST-led price revision in ICE models, OEMs relied on discounting and introduced lower-priced electric models to narrow the ICEEV price gap,” said Anuj Sethi, Senior Director, Crisil Ratings.Also Read: 11:11 | GST Reform, Impact on FMCG, Electric vehicles, and more

“While this has supported a recovery in volumes in recent months, the impact of the earlier supply disruption is expected to limit full-year growth to 12-13%.”The anticipated recovery is largely driven by the easing of rare-earth magnet supplies from China and proactive steps by manufacturers to diversify their sourcing, according to Sethi.

Future outlook

By the next fiscal year, E2Ws are expected to account for 7% of total two-wheeler volumes, up from 5.5%, the analysis showed. Scooters will continue to drive adoption, with EV penetration at 15%, and account for 90-95% of the E2W volume.

“The market share of legacy players has increased to 62% by January 2026 from ~47% a year earlier, clearly outperforming new-age players,” said Poonam Upadhyay, Director, Crisil Ratings.

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The share gain reflected legacy players’ stronger dealer reach and supplier ecosystems, along with an expanded range of entry-level and mid-priced electric models that enables faster rollout, wider availability, and more consistent execution, Upadhyay said.