GST 2.0 effect: EV penetration stays stagnant in November

The penetration of electric vehicles in India’s two-wheeler industry remained stagnant at 4.6% in November after the GST 2.0 reforms unleashed a rush for internal-combustion engine (ICE) vehicles for the second consecutive month. EV penetration stood at 4.6% in October 2025.

In absolute volumes, sales of electric two-wheelers declined 2.5% year-on-year to 1.16 lakh units in November, according to data released by the Federation of Automobile Dealers Associations (FADA).

In cars, the EV penetration rose marginally from 3.3% in October 2025 to 3.8% in November 2025—staying below the 5% mark achieved in July this year.

"EV penetration in cars and two-wheelers has eased after GST 2.0 as the price gap increased between electric and ICE models. With EVs continuing at 5% GST and most small cars and sub-350cc two-wheelers seeing cuts from 28% to 18%, ICE models became even more cheaper upfront. This pulled forward pent-up demand and pushed ICE volumes ahead of EVs, softening EV share, says Poonam Upadhyay, Director, Crisil Ratings.

Another reason for the fall in EV penetration in passenger vehicles is that the focus of automakers has been on premium EVs costing over ₹20 lakh, says Puneet Gupta, Director, India & ASEAN Automotive Market at S&P Global Mobility.

“I think that’s also one reason. The focus of electric carmakers must be on the mass segment - vehicle launches of around ₹15 lakh,” says Gupta. “Most of the vehicle launches are in the price category of roughly ₹20-30 lakh. I think if we see more aggression around ₹10-15 lakh, then this segment would grow much quicker,” he adds.

Similarly, in the two-wheeler segment, ICE vehicle prices have reduced after the GST rate cut. “The focus of OEMs is more towards petrol vehicles rather than electric vehicles. They anyway make more money on petrol than electrics,” Gupta says, adding that the demand for ICE vehicles is driven by price cuts following the GST reforms. “The GST on ICE vehicles has reduced by roughly 10%. Clearly, the benefit of the total cost of ownership has tilted in favour of petrol cars. That is why consumers are moving towards more ICE cars rather than EVs.”

Crisil’s Upadhyay says the lower GST made petrol scooters more attractive in the two-wheeler segment, compressing EV share even as electric models maintained year-on-year growth. “The current trend is driven by pricing dynamics, not a structural slowdown. What could shift the trajectory is the line-up of new EV launches expected over the next few months, which may recalibrate consumer choices even as the present price-driven tilt toward ICE persists. As battery prices decline, model offerings expand, and charging infrastructure scales up, EV penetration is expected to regain momentum,” Upadhyay adds.