Archive · 5 Jan 2026
Luxury EV Penetration Drops in India
Electric cars in the luxury segment are becoming less popular because regular cars with engines are now cheaper and offer better value for money.
This change happened after new tax rules were introduced.
Companies like Mercedes-Benz and BMW are seeing this trend, but they also say that some people still want electric cars for their benefits like being eco-friendly and having lower running costs.
BMW, for example, has seen a big increase in electric car sales, but regular cars are also selling more.
Audi says the market is still adjusting to the new rules and expects things to balance out next year.
EV penetration in the luxury car segment dropped by 2-3 percentage points in October and November 2025.
The shift is more noticeable in the entry-level luxury segment due to a wider price gap between EVs and ICE vehicles under GST 2.0.
Mercedes-Benz India reported an 8% EV penetration overall, with 20% in the top-end luxury segment priced above ₹1.5 crore.
BMW Group India saw a 21% EV penetration, with EV sales growing over 130% YoY and ICE sales growing double-digit YoY in Sep-Nov.
Audi India noted steady demand for its electric portfolio, with the Audi e-tron range's current allocations sold out.
- Who
- Luxury car manufacturers (Mercedes-Benz, BMW, Audi) and industry players
- What
- Decline in electric vehicle (EV) penetration in the luxury car segment
- When
- October and November 2025, under the GST 2.0 regime
- Where
- India
- Why
- Internal combustion engine (ICE) vehicles offering better total cost of ownership (TCO) and widened price difference under new GST rates
ICE Vehicle Advantage
EV Market Resilience
Cost Efficiency
ICE Vehicle Advantage
ICE vehicles offer better total cost of ownership (TCO) under GST 2.0, making them more attractive.
EV Market Resilience
EVs provide sustainability, lower running costs, and future-ready technology, driving steady demand.
Market Segment Impact
ICE Vehicle Advantage
Entry-level luxury segment sees a significant shift towards ICE vehicles due to widened price gaps.
EV Market Resilience
Top-end luxury segment maintains higher EV penetration, with price sensitivity being lower.
Future Outlook
ICE Vehicle Advantage
GST 2.0 has made ICE vehicles more attractive with reduced prices and financial offers.
EV Market Resilience
EV demand remains strong, with companies like BMW and Audi reporting significant growth in EV sales.
- EV Penetration Drop
- 2-3 percentage points
- Mercedes-Benz EV Penetration
- 8% overall, 20% in top-end
- BMW EV Penetration
- 21% of total sales
- BMW EV Sales Growth
- Over 130% YoY (Sep-Nov)
- BMW ICE Sales Growth
- Double-digit YoY (Sep-Nov)
- GST 2.0 Impact
- Lowered tax rates for certain ICE vehicles
- Audi e-tron Demand
- Consistent, with current allocations sold out
