EV demand tops output, pressures supply chains

EV penetration reaches 10.7% as Tata Motors, Ather Energy, Hero MotoCorp and Bajaj Auto expand capacity amid supply-chain constraints and rising festive demand.

EV penetration is at 10.7% as on date across vehicle categories 6, according to Vahan data. Electric cars accounted for 8.5% of passenger vehicle registrations in September, while electric two-wheelers made up 11.6% of registrations. Penetration in the three-wheeler segment was significantly higher at 64.9%. The rising adoption is adding to the pressure on manufacturers to increase output and strengthen their supply networks.

Tata Motors Passenger Vehicles (TMPV), the country's largest electric passenger vehicle maker, has seen bookings rise to nearly 2.5 times their pre-February 2026 levels, led by the Punch.ev and Nexon.ev. It increased EV production by nearly 40% in the second quarter over the first, taking quarterly wholesales to a record of more than 47,000 units, almost double the year-ago level. However, demand continues to outstrip supply. "While inventories remain lean, with demand outpacing supplies, we are working closely with our sub-system suppliers to increase supply and support deliveries through the festive period," Amit Kamat, chief commercial officer at TMPV, said.

The company has more than doubled its monthly EV production capacity to over 16,000 units from around 7,500-8,000 units last year. However, Managing Director and CEO Shailesh Chandra said in September that supplier capacity remained a constraint on further expansion. A similar squeeze is visible in electric two-wheelers. Ather Energy plans to increase annual production capacity from 420,000 units to 920,000 units with the commissioning of its AURIC facility in Maharashtra. Yet, waiting periods have stretched to two months or more in some states, while dealer inventory has fallen to less than a week from around 15 days earlier.

Hero MotoCorp is also expanding monthly EV capacity from 30,000 units in early August to a targeted 45,000 by the end of FY27, having started the current financial year at 15,000 units. Its channel inventory stood at just two to three days in early August. Bajaj Auto, meanwhile, plans to raise electric two-wheeler capacity from 50,000 units to 60,000 a month through productivity improvements and higher vendor output.

The constraints extend beyond manufacturing facilities. Automakers have flagged China's restrictions on critical components, including rare-earth materials used in motors, alongside higher costs and delays linked to geopolitical tensions in West Asia. Maruti Suzuki has commissioned a dedicated facility with annual capacity of 250,000 units for its e Vitara electric SUV, while TVS Motor has outlined broader manufacturing expansion plans. However, additional capacity alone may not resolve component shortages.

Chandra has said EV penetration has risen to around 8% from 4.5% last year and could reach double digits next financial year, making the industry's ability to secure supplies and ramp up production critical to sustaining growth.