Rising competition in Indian e2W industry to drive volume growth to 25 pc this fiscal

Backed by increasing availability of models and wider reach of distribution network of the legacy players, the favourable cost economics of e2W compared with the Internal Combustion Engine (ICE) variants will support growth, according to a Crisil Ratings report.

Meanwhile, legacy manufacturers can ride on strong cash flows from their ICE business but pure e2W makers will rely on incremental equity raises over the medium term.

“The intensifying competition and focus on capturing market share is seen stretching the break-even period of e2W players. Some players may take 2-3 years to reach EBITDA breakeven at current industry growth rate,” said Anand Kulkarni, Director, Crisil Ratings.

The e2W volume market share of legacy manufacturers surged to 45 per cent in fiscal 2025 from a mere 15 per cent in fiscal 2023 due to strong brand image and well-entrenched distribution networks.

In fiscal 2026, two more legacy manufacturers have announced e2W launches, which is expected to ramp up competition.

The e2W industry has been reducing prices to spur volumes, aided by two factors.

One, manufacturers are launching more-affordable models with smaller battery packs, due to which the upfront cost differential with ICE vehicles has narrowed to 5-10 per cent. And two, part of the reduction in battery prices — around 20 per cent in fiscal 2025 — has been passed on to consumers.

Going forward, battery prices are expected to remain rangebound, which will support the cost structure of the industry. Production-linked incentive schemes for the automotive industry and for battery making will also enable manufacturers to improve profitability as sales volume rises, said the report.

Competition, however, will play an important role in overall industry volume growth and penetration of e2Ws, it added.