Will 2026 Be The Year India’s EV Market Turns The Corner?

When the EV ride-hailing major BluSmart broke down in April 2025 due to financial and governance distress, many were stunned that a company known for its strong service quality and compelling value proposition had several cracks in its raft. 

The same is true for Log9 Materials, which had been showing signs of strain for over a year — slowing momentum, strategic missteps, and increasing debts. Then, Ola Electric’s market share began to shrink, as legacy giants like TVS Motor and Bajaj Auto, as well as Ather Energy, overtook the electric two-wheeler maker that once dominated the country’s EV landscape. 

In many ways, these events were not isolated shocks but the culmination of a trajectory set in motion much earlier. After the extreme lows and hype cycles of 2023 and 2024, the current year became a year of reckoning and correction for the Indian EV space.

However, if there has been one recurring theme in 2025, it is that the EV space is now being claimed not by the loudest players, but by companies with deeper tech, supply chain maturity, stronger unit economics, and disciplined innovative and scaling strategies.

Now, with 2025 coming to an end, the upcoming year is expected to set some important milestones for the sector. Industry leaders believe that 2026 will be defined by more innovation in battery technology, legacy auto players’ strengthening playbook across segments, and quick commerce growth, pushing the deployment of more electric three-wheelers on the road.

The industry is also awaiting policies to tighten further to curb the unregulated entry of Chinese EVs into the market.  

An ace EV investor and the founder of AdvantEdge VC, Kunal Khattar, told Inc42 that the ecosystem will start witnessing a clear differentiation between complete knock-down (CKD) assemblers and true product engineering companies. 

“…besides, investors, government, customers and the ecosystem will value better corporate governance, world-class technology and a customer-first culture.”

So, how will 2026 mark a turning point in the country’s maturing EV space? Let’s explore at scale…

Consolidations To Reshape Two-Wheeler EV Market

The three-wheeler segment has already seen consolidation over the years, which is expected to continue. Industry experts see more consolidations taking place in the electric two-wheeler segment.

According to the founder and CEO of Omega Seiki, Uday Narang, much like the three-wheeler segment, where tighter safety norms, rising compliance costs, and the need for better product reliability have naturally pushed out smaller, unsustainable players, the electric two-wheeler market is now entering a similar phase. 

“With margin pressure increasing, subsidies rationalising, and customers demanding safer, better-quality products, the weaker companies will struggle to survive independently in the electric two-wheeler market,” said Narang. 

He added that larger OEMs and international players will start acquiring smaller escooter brands for technology or dealer footprint. Mergers are also expected for battery platform integration, software/telematics synergies, and cost efficiencies.

Meanwhile, AdvantEdge’s Khattar thinks that besides mature categories like escooters and three-wheelers, which are already seeing weaker players losing market share or getting acquired by larger players, the other key drivers for M&As will be via the acquisition of deep technology IPs, to enter new markets or gain market share in areas like EV fleets, charging point operators, and batteries swapping stations, among others.

Along with consolidations, the competition is set to increase in emerging areas, especially in the electric motorcycle market. Legacy players such as Honda and Royal Enfield are already preparing for their respective launches, which will once again shake up the existing market of electric motorcycle startups like Ultraviolette, Kabira Mobility, Oben Electric, and Revolt, just to name a few.

By the end of 2026, the two-wheeler space is likely to get more disciplined, less fragmented, and controlled by players with scale, capital, technology depth and execution capability.

Heavy-Duty EVs To See Momentum

Led by ebuses, heavy-duty EVs have already started becoming mainstream. These will now pick up pace. In fact, electric tractors are slowly becoming more common in agricultural use cases, which is shaping the rural adoption of heavy-duty EVs.

The founder of the Indian School for Design of Automobiles, Avik Chattopadhyay, said that an increasing movement is visible in the adoption of smaller tractors for horticulture, hobby farming, and cash cropping.

He believes that while more new-age startups will emerge in this space with better innovation, the legacy giants in the ICE tractor space (for example Mahindra and Eicher) will also want to collaborate with startups to expand their catalogue.

Ebuses, on the other hand, will continue to be led by city fleets more than interstate buses. Electrification of interstate buses, especially the ones operated by various state transport departments, will take more time due to a need for more robust charging infrastructure.

However, one category that will continue to struggle towards electrification is etruck, experts say.

AdvantEdge’s Khattar believes that etrucks will still face challenges with additional battery requirements, leading to higher costs and impacting payload capacities. “However, certain types of use cases are seeing healthy adoption already, including shorter milk-run type routes in cement plants, mines and ports,” he said.

Narang of Omega Seiki, on the other hand, sees urban and regional routes to be first to see rapid electrification with heavy-duty EVs, as municipal bodies, logistics fleets and corporates are already ramping up trials of ebuses and medium-duty etrucks. 

More Stable Battery Tech On The Cards 

While fully commercial solid-state batteries may still be a few years away, there’s increasing movement on denser, more stable chemistries such as Lithium Iron Phosphate (LFP) technologies. 

Startups are also working on other chemistries like sodium-iron batteries, which are more eco-friendly and stable and can solve the electricity storage issues in solar and wind power plants.

Meanwhile, EV batteries are not only getting cheaper but also becoming more flexible, scalable, and serviceable. This will reshape cost models, ownership, and infrastructure strategies going forward. Fleet operators are moving from chargeable batteries to swapping tech, paving the way for more swapping stations and BaaS operators.

According to the MD and general manager of Yuma Energy, Muthu Subramanian, swapping has evolved from convenience to a mission-critical infrastructure layer powering India’s last-mile economy. 

“Swapping has now become one of the preferred energy choices for high-utilisation use cases like ecommerce delivery, logistics, and urban mobility,” he said, noting that interoperable, high-density swapping networks are becoming as common as fuel stations, while cost-per-swap is also set to reduce.

Chattopadhyay, however, expects private electric car makers to float the BaaS model for their cars. “Electric mobility has become a clear case of value economics. Once other ecar makers start offering BaaS as part of the value proposition, it’ll change the entire game and existing perception of consumers towards owning ecars.”

EV Adoption To Embrace Tier II Cities & Beyond

India’s mobility future depends on effective solutions that serve the masses, especially in tier II and III markets. Three-wheeler EV manufacturer Omega Seiki’s Narang said that mass mobility solutions that directly improve livelihoods in smaller towns will shape India’s EV story more than anything else. 

“Electric three-wheeler already provides the best economics in the EV space, strong adoption in goods movement and last-mile connectivity and a natural fit for quick commerce.”

The next level of innovation and adoption in the EV segment will be driven by the need for better mobility solutions in the rural and semi-urban areas of India. This will increasingly challenge the existing companies across the two, three, and heavy-duty EV categories to level up for India’s needs.

Quick commerce and last-mile ecommerce deliveries have already become a major driver for EV adoption, and these platforms are now aggressively finding avenues to enter the tier II and beyond markets. Hence, the path is clear for EV penetration in the country.

Chattopadhyay noted that it is the electric two-wheeler space that has largely catered to quick commerce so far, but in 2026, needles are expected to move into the electric three-wheeler space, catering to quick commerce.

“However, I must mention that India still doesn’t have such three-wheeler solutions that can traverse the terrains of rural India or the smaller towns in the country,” he said.

Clearer Rules On Low-Speed EVs

Tanvir Singh, cofounder and CEO of TrusTerra, a platform for used EVs, pointed out that the government must take action against unregistered two-wheeler Chinese imports.

“Across UP, Rajasthan, Madhya Pradesh, and Punjab, EVs are sold for as low as INR 30K-35K with lead-acid batteries that have a year’s warranty. And people in the hinterland are buying them, but there are no safety checks on them. These are being sold as low-speed scooters, which helps them avoid RTOs. The government must take cognisance of this,” Singh said.

Besides, a majority of the high-speed escooters used by the gig workers today are also Chinese products and are only being assembled in India. Hence, it’s clear that despite a major crackdown by the Indian government on Chinese CKD products, OEMs have found loopholes in the system.

Chattopadhyay mentioned that this is the reason mainstream legacy players haven’t yet touched the gig worker’s market. “Once regulations kick in and low-speed EVs are also required to be registered, mainstream players in India are likely to step into the segment.”

While it is unclear whether the RTO norms will change in 2026 itself, the industry clearly demands action on this front.

EV Funding To Shift To Fundamentals In 2026

Singh of TrusTerra pointed out that the next 6-12 months will likely be tricky for EV financiers due to the fallout of players like BluSmart, Log9, and a few others. 

While EV financiers will remain cautious, banks want to make the most of this opportunity. However, their decisions will be driven by the strong fundamentals of companies and their scalability.

Meanwhile, AdvantEdge’s Khattar said that VCs will keep investing in segments that solve the core problems in EV adoption, starting with commercial use cases. 

“This includes capital flowing into new vehicle categories with no established leaders, critical EV components, enabling infrastructure, financing/leasing solutions, EV aftermarket solutions, and battery recycling, among others.”

The government funding, on the other hand, is expected to continue towards infrastructure building. Amid the growing geopolitical tensions, India has already started emphasising lowering dependence on rare-earth magnets from China. Both private and government support are expected to lead innovation in the EV component segments in the coming year.

In a nutshell, as India’s EV ecosystem matures, 2026 will separate hype from hard fundamentals. Consolidation, stricter regulation, deeper technology, and mass-market use cases will define the next phase.

Edited by Shishir Parasher