Barriers Slow Electric Car Uptake Among India’s Middle Class
Stagnant incomes, high purchase costs, and sparse affordable EV models have slowed India’s middle-class shift to electric cars, even as government incentives boost EV adoption in other segments.
Slow Adoption of Electric Vehicles Among Middle-Class Car Owners in India
Limited Uptake Despite Incentives
Electric vehicle (EV) adoption among personal car owners in India has been slower than anticipated, particularly within the middle-class segment, despite significant government incentives and pressure from stricter emissions standards. Rising vehicle prices, low income growth, and high upfront costs have deterred buyers.
Stagnant Income vs Rising Costs
Industry reports indicate the average annual income for middle-class families rose just 0.4% over a decade, while car prices climbed at an annual rate of 7.6%. Inflation and higher insurance costs—especially for EV batteries—have further squeezed budgets. While EV sales are strong for three-wheelers and two-wheelers, passenger vehicles lag behind. In 2024–25, only 2.5% of passenger vehicle sales were electric, with numbers for affordable EV models still trailing conventional petrol and CNG variants.
Price Gap Between ICE and EV Cars
Cost differentials between ICE and EV cars, compounded by imported components and royalties, push EV prices above what most middle-class buyers can afford. Few locally produced batteries are available at competitive rates, leading manufacturers to rely on foreign supplies and pass associated costs to consumers. Industry profitability on EVs remains weak, with only Tata Motors recently posting gains.
Lack of Affordable EV Models
Affordable EV models under ₹10 lakh are rare, and most options lack desirable features. OEMs are hesitant to expand offerings in the low-margin compact segment, preferring to focus on higher-end vehicles. Owners often keep an ICE car as backup, given concerns over EV service quality and vulnerability to technical faults—particularly flooding, which has led to expensive battery replacements.
Policy Support vs Market Reality
Government subsidies, concessional GST, and infrastructure investments have yet to make EVs widely accessible or aspirational for the middle class. While policy continues to emphasise electric mobility, the market’s broader transition hinges on addressing high costs, expanding manufacturing, and improving service support.
What's Your Reaction?
