Oil prices surge past 100, fueling EV demand in May; passenger vehicle penetration rate rises to 6.4%, two-wheeler penetration nears 9%
- Pushed by sustained high oil prices resulting from the Iran conflict, demand in India’s electric vehicle market saw a clear uptick in May. According to Nomura data, the share of electric passenger vehicle sales rose from 4% in fiscal 2025 to 6.4% in May, while electric two-wheelers increased from around 6.5% last year to 8.9%.
- An HSBC report noted that the recent rise in fuel prices has steered customer demand towards electric vehicle purchases. The agency estimates May penetration rates at 9.3% for electric two-wheelers and 6.6% for electric passenger vehicles. Nomura considers India’s electric vehicle market to be at a “tipping point,” driven by policy support and increasing consumer acceptance.
- Tata Motors has become the main beneficiary of surging electric passenger vehicle demand, with the company’s electric vehicle sales up 85% year-on-year. Its order bookings have increased by 1.5 times over the past two months, with especially strong demand in the price segment below 150,000 rupees. The company plans to raise its monthly production capacity from 10,000 to 15,000 units.
- The transformation in the two-wheeler sector is even more pronounced. Nomura’s report shows TVS Motor continues to lead the market with around 42,000 registered electric scooters, followed by Bajaj Auto and Ather Energy. Ather’s sales more than doubled year-on-year, pushing its market share up to 16.5%.
- The crude oil basket that underpins India’s domestic fuel pricing remained above $100 per barrel for the third consecutive month in May, due to the Middle East crisis disrupting transport through the Strait of Hormuz, which handles 20% of global oil and gas exports. The on-and-off ceasefire negotiations between the US and Iran have introduced further uncertainty, and the market expects oil prices to possibly rise further. Meanwhile, Indian Oil Corporation continues to lose about 5.5 billion rupees daily on oil product sales, as the government has curbed price hikes to protect consumers.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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