India is the world’s largest market for two-wheelers. These vehicles form a crucial part of everyday mobility and serve as a primary means of income for millions of people. Analysts often use two-wheeler demand as an indicator of India’s economic momentum. When the country began shifting toward electric vehicles, the earliest focus was on electric two-wheelers.
In 2020, India’s electric two-wheeler market was nearly nonexistent, but by 2025, it had become the second-largest in the world, with penetration crossing 8%. Despite this growth, the sector remains unstable. In the second quarter of FY26, rapid changes unfolded: China restricted imports of critical components, new technological developments entered the market, and government policies were revised. The recent months have been particularly challenging for the electric two-wheeler industry.
Performance Overview of Four Major Industry Players
Four major companies set the tone for the sector’s quarterly performance: Ather, Ola Electric, Bajaj Auto, and TVS Motor.
1. Ather
Ather sold around 65,600 units, a 67% year-on-year increase, and recorded ₹941 crore in revenue. Its market share expanded from 12.1% to 17.4%. Though still unprofitable, the company reduced its cash burn and improved EBITDA margins from −21% to −10%.
2. Ola Electric
Ola Electric reported sales of 52,666 vehicles, nearly half of its volume from the previous year, resulting in a loss of market share. However, its EBITDA turned positive at 0.3%, mainly due to cost-cutting measures. These two companies once dominated the sector, but as they invested aggressively in building the market, legacy manufacturers such as Bajaj and TVS entered the space.
3. Tvs Motor
TVS Motor has recently become the segment leader. The last quarter was its strongest to date for both EV sales and overall business performance. The company recorded ₹195 crore in quarterly operating revenue and ₹1,226 crore in profit before tax. In the second quarter of FY26, TVS sold nearly 1.5 million vehicles, of which about 5.3% were electric scooters—meaning that only a small portion of its total business already exceeded the scale of Ola or Ather individually.
4. Bajaj Auto
Bajaj Auto did not provide a detailed breakdown of EV sales, but confirmed that EVs were its fastest-growing segment. The company had one of its best quarters, selling 12.94 lakh units, reporting an EBITDA margin of 20.5% and ₹24,922 crore in revenue—both all-time highs.
Rare-Earth Magnet Disruptions and Industry Responses
China disrupted India’s imports of rare-earth magnets, which are essential for EV motors. Any interruption places heavy pressure on manufacturers. Each company responded differently. Ola claimed it reacted fastest, certifying new traction motors by October and eliminating dependence on rare-earth magnets. This is a significant technical claim that requires deeper examination.
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| Photo - JKM Research & Analytics |
Electric motors typically rely on two categories of magnets. Rare-earth magnets, made from neodymium, are compact, powerful, and heat resistant—ideal for EVs. China controls most of their supply. The second category is ferrite magnets, made from iron compounds. They are widely used, much cheaper, but heavier, weaker, and less heat tolerant. Tesla has already adopted ferrite-based motors in certain applications. The question is whether ferrite motors can deliver performance comparable to rare-earth systems.
Ola stated that it optimized its magnetic circuits and redesigned components to improve output, asserting that ferrite motors in the 7 kW and 11 kW classes can match rare-earth motor performance. While technically possible, such a claim implies compromises not yet visible. Real-world results, including high temperatures and heavy usage, will determine whether this approach is successful. If proven, it could be a major breakthrough, though its outcome remains uncertain.
Ather took a more controlled strategy. It is transitioning away from heavy rare-earth magnets—where China has the greatest control—and focusing on lighter rare-earth materials to avoid elements like dysprosium and terbium. These elements handle high temperatures well and prevent motor strength losses during heat buildup. This shift reduces supply-chain risk, but may reduce engine efficiency under heat stress. Ather described the move as temporary and is seeking long-term solutions. Supply disruptions also forced the company to defer ₹26.2 crore in state incentives.
The other two manufacturers did not specify their mitigation strategies. Bajaj Auto openly acknowledged that magnet shortages hurt operations but expressed confidence in the business and the industry. The flagship Chetak model suffered, but recovered faster than expected. TVS management also stated that performance would have been stronger if magnets had been fully available.
Impact of Government Policies: PLI Schemes and GST Reform
Government policies have also influenced the sector, particularly the Production-Linked Incentive (PLI) schemes and GST reforms. PLI schemes refund 13–18% of sales value to EV manufacturers in exchange for strict investment and compliance conditions. Some companies benefitted in FY26’s Q2, while others did not. Bajaj Auto was a major beneficiary, with eligibility to claim ₹630 crore from PLI incentives this year—the largest claim among all auto manufacturers, including four-wheelers. The company submitted 13 PLI applications for various Chetak models, all of which were approved, improving margins.
In August, Ola’s entire S3 scooter lineup was certified for PLI benefits through 2028. By September, the company had filed claims worth ₹380 crore for about ₹3,000 crore in FY25 sales, although these incentives contributed only marginally to EBITDA margins and may be disbursed later. TVS began booking PLI benefits after completing compliance audits in Q4 FY25 and may claim around ₹330 crore, which improved margins year-on-year by 0.5%.
Despite being India’s second-largest EV manufacturer, Ather did not qualify for PLI incentives. As a result, it delayed several product launches, negatively affecting performance.
GST reforms introduced another layer of pressure. In September, GST on petrol two-wheelers under 350cc was reduced from 28% to 18%, while EVs remained at 5%. This widened the cost gap, reducing EV price attractiveness just before the festive buying season. EV makers, however, have shown limited concern. Internal combustion vehicles have become more appealing in the short term, but EV demand remains strong.
In October, industrywide sales hit an all-time high of 1.44 lakh units. Over a vehicle’s lifespan, EVs cost less to operate because electricity is cheaper than fuel, diminishing the impact of a 7% price drop in petrol models. Short-term pressure persists, and Ather expects temporary defensive pricing or discounts to maintain sales.
Growing Sector Challenges: Charging Networks and Service Infrastructure
As EV volumes grow, the sector faces two structural challenges: charging access and service networks. The current charging infrastructure is fragmented. Most owners charge their vehicles at home through standard 15-amp sockets overnight—a workable solution for personal use. Commercial riders and delivery fleets require fast charging during the day. Manufacturers are attempting to address this through proprietary networks such as Ather Grid and Ola Hypercharger. However, these networks are mutually incompatible; for example, Chetak cannot use Ola chargers. Without standardised frameworks, charging ecosystems remain siloed, limiting overall growth.
Battery swapping offers another approach, but each company designs unique battery sizes and formats. While some experiments are underway for three-wheelers, no standardised swapping model exists for electric scooters.
Service networks present an additional challenge. After-sales support has been difficult, especially for Ola, which acknowledged heavier backlogs and parts shortages beyond seasonal norms, coupled with a lack of skilled technicians. To address this, the company introduced Hyper Service, allowing third-party garages to use officially supplied parts for Ola vehicles. The gap remains significant, particularly against legacy players.
TVS and Bajaj can upgrade their existing service networks for EVs, without building new infrastructure. Bajaj already operates 390 Chetak-exclusive stores and more than 4,000 retail points. Matching this scale is difficult for startups like Ather and Ola.
Outlook for India’s Electric Two-Wheeler Industry
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| Photo - Clean Mobility Shift |
India’s electric two-wheeler market is expanding rapidly, but the landscape of competition is evolving with it. The sector’s future will depend on how effectively companies respond to supply-chain volatility, policy changes, infrastructure challenges, and long-term service expectations.
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Disclaimer:
The information provided in this article is for educational and informational purposes only. While we strive to ensure the accuracy and reliability of the data on electric two-wheelers, EV motors, industry performance, and government policies, StoryAntra and its contributors make no warranties or guarantees regarding the completeness, accuracy, or timeliness of the content. Readers should conduct their own research or consult qualified professionals before making any business, investment, or purchasing decisions.All opinions, forecasts, and analyses reflect the author’s understanding at the time of writing and may change due to market dynamics, regulatory updates, or technological developments.
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