Fuel Cost Surge Drives EV Sales to Record Levels in May, Says Bernstein

India’s electric vehicle (EV) market witnessed a sharp rise in demand in May 2026, with total retail registrations crossing 1.9 lakh units, marking a 70% increase compared with the same month last year. According to a report by Bernstein, higher fuel prices emerged as the primary catalyst behind the surge, outweighing the impact of government subsidies.

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The brokerage noted that oil marketing companies increased petrol, diesel and CNG prices during the second half of May, the first such revision in four years. The move followed geopolitical disruptions in West Asia and appears to have significantly influenced consumer purchasing decisions.

Demand Strengthens After Fuel Price Increase

Bernstein noted a distinct shift in buying trends post the increase in fuel prices. Passenger vehicles with electric drive registered amounted to some 10,300 units in the first half of May, but jumped to almost 16,000 units in the second half of the month.

The reports said that the consumers are increasingly considering the total cost of vehicle ownership, and as fuel costs increase, consumers are finding EVs to be an attractive alternative to conventional internal combustion engine vehicles.

Two-Wheelers continue to fuel the market growth

EVs: Electric two-wheelers remain the biggest segment. Registrations touched around 1.67 lakh units during May, up 66% YoY.

The segment’s penetration in the overall two-wheeler market also improved. Electric two-wheelers accounted for 8.9% of total two-wheeler sales in May, compared with 6.7% recorded in January 2026.
The passenger vehicle category delivered even stronger growth. Electric car registrations touched an all-time high of around 26,000 units during the month, representing a 98% increase from a year ago.

Tata Motors, Mahindra Lead Passenger EV Expansion

Domestic manufacturers played a major role in the segment’s growth. Tata Motors crossed the milestone of 10,000 monthly retail EV sales for the first time, while Mahindra & Mahindra reported more than 6,000 retail registrations during the month, another record for the company.

Bernstein noted that the strong performance came despite a reduction in incentives available under the PM E-Drive scheme after March. The brokerage said this indicates that demand is increasingly being supported by economic factors rather than subsidy-driven purchases.

Ola Electric Shows Signs of Recovery

The report also pointed to improving momentum at Ola Electric. Monthly registrations, which had dropped to around 4,000 units in February, recovered to roughly 15,000 units in May.

According to Bernstein, the company’s market share has stabilized above 8%, suggesting that efforts to improve customer service and adjust pricing strategies may be helping restore demand.

Global Context

While global EV demand remained mixed, India’s performance stood out. Bernstein’s EV Tracker showed worldwide EV sales rose 7% year-on-year in April. China recorded a 6% decline, and North America saw a 28% drop, while emerging markets posted the strongest growth.

The brokerage said India’s latest sales trend points to a structural shift, with rising fuel costs increasingly strengthening the economic case for electric mobility.