Intensifying Competition in Indian e2W Sector to Propel 25% Volume Growth This Fiscal Year
Synopsis
The report indicates that the Indian electric two-wheeler (e2W) industry is set to experience a significant volume growth of 25% in FY26, fueled by increasing competition, improved distribution networks, and favorable cost economics compared to ICE vehicles.
Key Takeaways
Volume growth in the e2W sector expected to reach 25% in FY26.
Legacy manufacturers hold a 45% market share in e2Ws.
Affordability and distribution are key growth drivers.
Price reductions in batteries benefit consumers.
Competition influences overall industry growth and e2W market penetration.
New Delhi, April 17 (NationPress) The escalating rivalry in the electric two-wheelers (e2W) sector is projected to elevate volume growth to 25 percent in the current fiscal year (FY26), following the milestone of surpassing one million units (6 percent of the total 2W market) in fiscal 2025, according to a report released on Thursday.
With an expanding array of models and an enhanced distribution network from established players, the favorable cost structure of e2W compared to Internal Combustion Engine (ICE) alternatives will further bolster growth, as highlighted in a report by Crisil Ratings.
In addition, traditional manufacturers can leverage robust cash flows from their ICE operations, whereas dedicated e2W manufacturers might depend on additional equity funding in the medium term.
“The rising competition and emphasis on acquiring market share is expected to extend the break-even timeline for e2W companies. Some may require 2-3 years to achieve EBITDA breakeven under the current industry growth trends,” stated Anand Kulkarni, Director at Crisil Ratings.
The e2W volume market share claimed by legacy manufacturers rose to 45 percent in fiscal 2025 from a mere 15 percent in fiscal 2023, a result of their strong brand reputation and well-established distribution channels.
In fiscal 2026, two additional legacy manufacturers have announced their e2W launches, which is anticipated to escalate competition.
The e2W industry has been reducing prices to boost volumes, driven by two key factors.
First, manufacturers are introducing more affordable models with smaller battery packs, thereby narrowing the upfront cost gap with ICE vehicles to 5-10 percent. Second, a portion of the reduction in battery prices—approximately 20 percent in fiscal 2025—has been transferred to consumers.
Looking ahead, battery prices are likely to remain stable, supporting the industry's cost framework. Production-linked incentive programs for the automotive sector and battery production will also assist manufacturers in enhancing profitability as sales volumes increase, according to the report.
Nevertheless, competition will be a crucial factor in driving overall industry volume growth and the penetration of e2Ws, the report concluded.
