The passenger vehicle industry in India is expected to touch a record cumulative domestic and export volume of 50 lakh units this fiscal despite the annual growth rate slowing down to 2-4 per cent, according to Crisil Ratings.
However, penetration of electric vehicles (EVs) is seen at a moderate 3-3.5 per cent despite launches and declining battery costs because of high prices, modest charging infrastructure and range anxiety, restricting the market to urban users as a second car option, the analytics firm said in a statement.
The growth in the EV segment has slowed after doubling last year on a low base, it added.
This marks the fourth consecutive year of record sales, although momentum has significantly eased from the 25 per cent surge in fiscal 2023 after the pandemic.
The domestic market accounted for about 85 per cent of total volumes last fiscal, with exports accounting for the rest, Crisil Ratings said.
The entry of global premium EV models, including Tesla would intensify competition in the premium segment, which accounts for less than 10 per cent of the overall volume.
This will likely reset consumer expectations across categories, pushing Indian Original Equipment Manufacturer (OEMs) to accelerate technology upgrades, Crisil Ratings said.
Going ahead, the pace of interest rate cuts and EV adoption, as well as potential supply shocks could impact the availability of chips and battery cells.