Recovery is expected as rare-earth magnet supplies improve and manufacturers begin diversifying and localising critical component sourcing.
India’s electric two-wheeler market is expected to stage a strong rebound as easing supplies of rare earth magnets and clear ownership cost advantages help revive demand, according to Crisil Ratings.
Electric two-wheeler volumes are forecast to grow 16 to 18% in FY27, up from an estimated 12 to 13% in FY26. Growth in the current year was constrained by temporary disruptions in the availability of rare earth magnets and the short term impact of GST led to price reductions in internal combustion engine vehicles, Crisil said.
The recovery is expected to be driven by improving access to critical components, particularly rare-earth magnets that are largely sourced from China. Manufacturers are also taking initial steps to diversify supply chains and increase localisation, which should help reduce vulnerability to future disruptions.
“The supply disruption caused by the shortage of rare earth magnets had weighed on volumes around mid year. With supply conditions improving and the structural cost advantage of EVs intact, growth is expected to re-accelerate next fiscal,” said Anuj Sethi, senior director at Crisil Ratings.
Electric two-wheelers continue to maintain a strong total cost of ownership advantage despite a tapering of government subsidies and slower declines in battery prices. Running costs for electric models are estimated at around ₹0.3 per km, compared with ₹2 to ₹2.5 per km for petrol powered vehicles.
However, Crisil warned that intensifying competition could accelerate consolidation in the sector, putting pressure on weaker players with limited scale or access to capital, even as overall market growth improves.
