Daijiworld Media Network - New Delhi

New Delhi, Apr 17: The electric two-wheeler (e2W) segment in India is poised for robust growth in FY26, with volumes expected to rise by 25%, according to a new report by Crisil Ratings. This comes on the heels of the industry crossing the one million mark in FY25, representing 6% of the total two-wheeler market.

The surge is being driven by an expanding range of models, improved distribution networks—particularly among established legacy brands—and the increasingly competitive cost advantage of e2Ws over traditional Internal Combustion Engine (ICE) vehicles.

Crisil Ratings noted that while legacy auto giants can leverage strong cash flows from their ICE businesses to fuel electric ambitions, pure-play e2W startups are likely to depend on additional equity funding over the medium term to stay in the game.

“The race for market dominance is intensifying,” said Anand Kulkarni, Director at Crisil Ratings. “As a result, many electric two-wheeler players may take two to three years to achieve EBITDA breakeven, given the current pace of industry expansion.”

Legacy manufacturers have already made significant inroads. Their share of the e2W market climbed from 15% in FY23 to a commanding 45% in FY25, thanks to strong brand recognition and extensive dealer networks. With at least two more established automakers preparing to launch electric two-wheelers in FY26, the competitive landscape is set to heat up even further.

To boost volumes, manufacturers have been strategically lowering prices. Two key trends are driving this affordability push:

1. Launch of Budget-Friendly Models: Many new e2W offerings come equipped with smaller battery packs, significantly narrowing the price gap with ICE counterparts to just 5–10%.

2. Falling Battery Costs: A 20% drop in battery prices in FY25 has allowed companies to pass on savings to consumers.

Looking ahead, battery prices are expected to remain stable, providing a more predictable cost base for manufacturers. In addition, government-led production-linked incentive (PLI) schemes—both for vehicle manufacturing and battery production—are likely to improve profitability as sales volumes grow.

However, Crisil’s report emphasizes that it is competition that will remain the defining factor in how quickly the e2W market scales up and penetrates deeper into India’s vast two-wheeler space.