India's electric vehicle market is hitting a wall — not because buyers are staying away, but because factories cannot churn out vehicles fast enough. Across passenger cars and two-wheelers, the story is the same: order books are swelling, waiting periods are stretching, and dealer inventories are shrinking to days instead of weeks.
The numbers tell a clear story. EV penetration across all vehicle categories has reached 10.7 percent as per Vahan data. Electric cars accounted for 8.5 percent of passenger vehicle registrations in September, while electric two-wheelers made up 11.6 percent. Three-wheelers lead at 64.9 percent penetration. This surge has caught the supply chain off guard.
Tata Motors: Doubling Capacity Yet Falling Short
Tata Motors Passenger Vehicles, the country's largest electric car maker, has seen bookings rise to nearly 2.5 times their pre-February 2026 levels. The Punch.ev and Nexon.ev are driving this demand. The company increased EV production by almost 40 percent in the second quarter over the first, pushing quarterly wholesales to a record of more than 47,000 units — nearly double the year-ago level.
Monthly EV production capacity has more than doubled to over 16,000 units from around 7,500-8,000 units last year. Yet Managing Director and CEO Shailesh Chandra said in September that supplier capacity remains a constraint on further expansion. Amit Kamat, chief commercial officer at TMPV, noted that inventories remain lean and the company is working closely with sub-system suppliers to increase supply through the festive period.
Heavy rain at the Sanand plant in Gujarat cost five full production days in one month, adding to the pressure. Dealer stock stood at 30 days, lower than what Tata wanted heading into the festive season.
Ather Energy: Demand Nearly Double the Supply
Ather Energy co-founder and CEO Tarun Mehta put it bluntly: monthly demand is almost two times what the company can supply right now. In the last couple of quarters, this gap has forced a massive capacity ramp-up. Monthly capacity of about 35,000 units is being pushed to almost 95,000 in the next few quarters with new plants across the country.
The AURIC facility in Maharashtra will lift annual production capacity from 420,000 units to 920,000 units. Yet waiting periods have already stretched to two months or more in some states. Dealer inventory has fallen to less than a week from around 15 days earlier. The capacity crunch even delayed the entry-level variant under the Konark range — with limited capacity, Ather chose to launch mid-range variants first. The entry variants will arrive when new Maharashtra capacities go live, taking installed capacity from 35,000 to almost 80,000 a month within less than two quarters.
Hero MotoCorp and Bajaj Auto: Playing Catch-Up
Hero MotoCorp is 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 plans to raise electric two-wheeler capacity from 50,000 units to 60,000 a month through productivity improvements and higher vendor output. Both companies are racing to close the gap between what buyers want and what factories can deliver.
The Supply Chain Bottlenecks
The constraints go beyond factory floor space. 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.
Ather's Mehta noted that while 70-80 percent of what goes into their vehicles is indigenous, lithium-ion cells and certain chipsets still come from China, South Korea, and Malaysia. He expects the government's semiconductor mission to increase indigenization of electronic chips over the next three to four years. For lithium-ion cells, capacity with partners is going live, which should help indigenization over the same timeframe.
Commodity prices have added another layer of pain. Aluminum stayed at highs longer than expected. Lithium has gone up two to three times. Copper has seen a massive run due to AI demand and US stockpiling. These have been pricing headwinds rather than supply headwinds so far, allowing companies to pass on price hikes that the market has absorbed without demand falling off a cliff.
The Margin Squeeze
Rising input costs are hitting profitability. Maruti's commodity costs alone cut about 3 percentage points off its profit margin. Mahindra took a hit of about 4.5 percentage points, partly offset by July price increases with more hikes under consideration. For Tata, commodity costs wiped 4.5 percentage points in one quarter, with another 3 percent expected in the next — a hit the company chose to absorb mostly.
Supplier contracts typically reset with a delay, so a commodity spike in one quarter keeps showing up in margins the next. This lag means the pain could linger even if raw material prices start falling.
Export Boom Adds Complexity
Maruti Suzuki's eVitara export story adds another dimension. India's electric passenger-car exports jumped from barely 1,300 units in Q1 FY26 to over 10,800 units in Q1 FY27. Europe accounted for most of it, with Spain the single largest buyer at over 4,000 units. The EU's extra tax of up to 35.3 percent on Chinese-made EVs, on top of the normal 10 percent import duty, gives India-built vehicles a price advantage — they pay only the normal 10 percent.
Maruti has commissioned a second line at Kharkhoda in Haryana and a fourth line at Hansalpur in Gujarat dedicated to the eVitara, taking total capacity across both states to about 2.9 million vehicles a year. This serves both domestic orders and the growing export business off the same lines.
What Comes Next
All major players are adding capacity. Mahindra plans total capacity to rise from 64,500 vehicles a month to 82,000 by March 2027, with electric SUV capacity moving from about 8,000 a month to 12,000. Hyundai's new Talegaon plant near Pune is running at 1.7 lakh units a year alongside its 8.2 lakh-unit Chennai complex, with Talegaon moving to three shifts from October — nearly two years ahead of plan.
Tata is lifting monthly EV output from 9,000 to over 15,000 by running both petrol and electric versions of the Nexon and Punch through the same factory lines. Maruti has already switched on new plants. But commissioning a factory and running it at full speed are two different things.
The industry's ability to secure supplies and ramp up production will be critical to sustaining growth. EV penetration has risen to around 8 percent from 4.5 percent last year and could reach double digits next financial year. For now, the waiting game continues — for buyers, for dealers, and for automakers watching their order books grow faster than their production lines.