New Delhi, February 6, 2026
Rare-Earth Supply Issues Weigh on Electric Two-Wheeler Growth
India’s electric two-wheeler (e-two-wheeler) market may witness moderate growth of 12–13% in FY 2025–26, constrained by shortages of rare-earth minerals, particularly magnets used in electric motors. However, sales momentum is expected to recover strongly to 16–18% in FY 2026–27 as supply conditions stabilize, according to a report by Crisil Ratings.
The rating agency noted that disruptions in the supply chain of rare-earth materials and GST rationalization on internal combustion engine (ICE) models have temporarily slowed demand for electric two-wheelers in the current fiscal year.
📊 Recent Performance and Outlook
Despite near-term challenges, the sector has shown resilience. In FY 2024–25, electric two-wheeler sales grew by a robust 22%, reflecting rising consumer acceptance and improving product offerings.
Anuj Sethi, Senior Director at Crisil Ratings, said that the rare-earth supply disruption impacted sales mid-year, but demand has begun to recover in recent months as availability improves.
🔋 Supply Improvement, Discounts Boost Demand
As the availability of rare-earth minerals improves and prices of ICE models adjust following GST changes, original equipment manufacturers (OEMs) have responded with:
Price discounts
Launch of lower-priced electric models
Efforts to narrow the ICE–EV price gap
These measures have helped revive showroom footfalls and improve affordability for first-time EV buyers.
🏭 Legacy OEMs Strengthen Market Grip
According to Poonam Upadhyay, established players have significantly strengthened their presence in the electric two-wheeler market.
Market share of legacy OEMs rose from 47% a year ago to 62% by January 2026
Growth has been driven by strong dealer networks, reliable supply chains, and an expanded range of entry-level and mid-priced electric models
Reliability, after-sales service, and brand trust continue to favor established manufacturers over newer entrants.
💰 Lower Running Costs Keep EVs Attractive
While GST cuts have reduced the upfront cost of ICE vehicles, electric two-wheelers still maintain a clear advantage in running costs:
Electric two-wheelers: ~₹0.03 per km
ICE two-wheelers: ~₹2–2.5 per km
This significant difference ensures that total cost of ownership (TCO) remains favorable for electric vehicles, even as government subsidies gradually decline.
⚠️ Competitive Pressure: Old Players Better Positioned
Crisil noted that while the projected 16–18% growth in FY27 is supported by structural ownership-cost advantages, competition remains intense.
Established OEMs are better equipped to absorb pricing and margin pressures
Newer players face challenges due to weaker unit economics and profitability constraints
As a result, market consolidation may continue, with legacy manufacturers gaining further ground.
