The electric vehicle narrative in India has acquired an almost ceremonial confidence—FAME-III commitments, Karnataka’s 100-acre EV City, charger benchmarks revised downward by 28 per cent, and a government target of 30 per cent EV penetration by 2030 repeated with the assurance of settled fact. Into this optimism, Tokyo-based Nomura Research Institute has delivered a forensically argued dissent. Presented by senior analyst Hiroshi Tanaka at Bengaluru’s Auto Expo 2026, the firm’s forecast projects petrol internal combustion engines commanding 65 to 70 per cent of India’s passenger vehicle market through 2035, with electric vehicles struggling to exceed 20 per cent share even by 2040. The projection does not dismiss India’s EV ambitions—it interrogates whether policy fervour alone can override mass-market economics, and concludes, uncomfortably, that it cannot.
The Economics That Keep Petrol Firmly in the Driver’s Seat
Nomura’s analysis rests on a foundation that EV advocates have long struggled to argue away: the upfront cost differential between electric and petrol vehicles in the segments that actually drive volume. A Tata Nexon EV commands ₹14 lakh against the ICE equivalent at ₹9 lakh—a gap that lifecycle savings arguments cannot bridge for buyers financing on thin margins or purchasing outright from household savings. Tanaka’s central assertion is precise: India’s mass market prioritises acquisition cost over total cost of ownership, and until that arithmetic changes, petrol retains its hold regardless of subsidy architecture.
The charging infrastructure reality compounds the affordability barrier. India’s 29,277 public charging stations serve 2.3 million registered EVs, producing a 1:20 vehicle-to-charger ratio against China’s 1:7. Nomura forecasts that India reaches a 1:10 ratio only by 2032—four years beyond the government’s 2028 pledge—with highway corridors critically underserved relative to urban clusters. Petrol’s 20,000-plus refuelling stations, distributed through Tier-2 and Tier-3 cities that account for 70 per cent of national demand, provide a network density that ₹18,000 crore of RDSS grid upgrades cannot replicate within the current planning horizon. Consumer psychology reinforces the structural reality: the familiarity of a five-minute petrol stop, combined with an established national service network and manageable resale depreciation, produces loyalty that charging infrastructure improvements alone are insufficient to displace.
Where India’s EV Story Is Actually Working
Nomura is careful not to present a uniformly bleak picture, and the distinction it draws is analytically significant. India’s two-wheeler EV trajectory is described as genuine success—86 per cent of FY25 registrations were electric, propelled by PM E-Drive subsidies, falling lithium iron phosphate battery prices down 40 per cent since 2024, and compelling last-mile economics in urban centres. Ola FutureFactory’s 30 GWh production capacity, Ather’s expanding grid, and the pivots by Hero and Bajaj collectively position the segment for 80 per cent electrification by 2030, with downstream benefits including a projected 30 per cent reduction in urban PM2.5 and $5 billion annually in reduced oil import dependency.
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The four-wheeler market presents an entirely different picture. Passenger car EV penetration is forecast to stall at 12 per cent by 2030 and 18 per cent by 2035—figures that stand in sharp contrast to FAME-III’s private car mandate. CNG emerges in Nomura’s modelling as the genuine dark horse, potentially capturing 15 per cent of the market by 2030 as a bridge technology, mirroring the role Toyota and Honda hybrids have played in Thailand and Brazil. The rare earth supply chain vulnerability adds further structural pressure: China’s December 2025 suspension of NdFeB magnet exports has already idled production lines at Tata and Ola, forcing engineers toward synchronous reluctance motor and ferrite magnet alternatives that trail conventional permanent magnet motors by 15 to 20 per cent in efficiency.
What Policy Can and Cannot Fix
Tanaka’s sharpest critique is reserved for policy design rather than policy ambition. FAME-III’s subsidy allocation is weighted heavily toward two-wheelers—the segment already demonstrating organic commercial viability—whilst four-wheeler incentives remain insufficient to close the acquisition cost gap that actually determines purchase decisions. Highway fast-charging infrastructure on the NH-48 corridor requires 10,000 charging points; current deployment trajectories deliver a fraction of that within the relevant planning period. The ACC PLI programme’s 20 GWh allocation at Reliance’s Jamnagar facility represents meaningful domestic battery manufacturing intent, but faces entrenched competition from CATL and LG Chem with considerably deeper experience curves.
Karnataka’s EV City testing facility and the revised charger benchmark of ₹3.4 lakh per 60 kW unit represent genuine policy urgency. Nomura does not question the intention—it questions whether the scale of intervention matches the timeline being publicly committed to. Budget 2026 must respond with precision: GST parity on four-wheeler EVs, rural credit guarantee frameworks that extend financing to Tier-3 buyers, and highway charging PLI ringfenced separately from urban deployment subsidies. India’s petrol dynasty will end—Nomura does not suggest otherwise—but mass-market economics, not ministerial ambition, will determine the actual date of abdication.