Tata Motors Passenger Vehicles Ltd has not seen any immediate impact on electric vehicle sales following the GST-led price cuts on internal combustion engine passenger vehicles, Managing Director Shailesh Chandra said on Tuesday, even as ICE demand has picked up sharply in recent months.
He cautioned that the December quarter is not the right lens to judge consumer behaviour, given the distortions caused by the festive season and year-end buying. “This is a very high-volume quarter because of the festive season and December sales,” Chandra said during a media interaction. “The real impact has to be seen from January onwards, when we get a clearer sense of how customers respond.”
In September, the government rolled out GST 2.0, rationalising tax rates on ICE passenger vehicles. The changes lowered the effective GST on small and mid-size models to 18% from earlier levels of up to 28%, while simplifying the tax burden on SUVs and premium vehicles that earlier attracted a higher incidence. Electric cars, however, continue to be taxed at a concessional GST rate of 5%.
Chandra said the tax reset has altered short-term growth dynamics between ICE vehicles and EVs, but has not derailed the broader electrification trend. “For EVs, it has been business as usual. For ICE, there has been a significant reduction in prices, and that has clearly boosted volumes,” he said.
According to him, ICE passenger vehicle sales have grown in double digits over the past two to three months. “We are seeing 15% to 20% growth rates in ICE,” he said. This relative acceleration has led to fluctuations in EV penetration, rather than an absolute slowdown in EV demand.
In FY25, EV penetration stood at about 2.5%. Ahead of GST 2.0, it had risen to nearly 5.5% as ICE volumes declined. “Post-GST 2.0, penetration numbers will keep fluctuating because there has been an intervention that has revived ICE sales,” Chandra said. “That does not mean EV demand is weakening.”
He pointed to a sharp rise in absolute EV volumes as a more meaningful indicator. “One year back, monthly EV industry volumes were around 7,500 units. Today, they are fluctuating between 16,000 and 18,000 units. That is the reference you should take,” he said. “I don’t see any alarm bells right now.”
On price parity, Chandra said the challenge varies sharply by segment. In premium EVs, parity with ICE vehicles has already been achieved, supported by higher average prices and stronger technology propositions. In the mid-size segment, priced between ₹12 lakh and ₹20 lakh, Tata Motors is confident of bridging the gap, with models such as the Nexon EV already offering a competitive value equation.
The entry-level EV segment remains the toughest. Models such as the Tiago EV and Punch EV face pricing pressure because battery size cannot be reduced without compromising range. “In the entry segment, cost reduction efforts go into increasing battery size rather than cutting prices, at least until we cross the 400-kilometre range mark,” Chandra said.
He added that range, price parity, and lifetime battery warranty are critical to driving adoption, especially as lower-range vehicles require more charging cycles for the same distance travelled.
While acknowledging that achieving price parity in this segment will take longer, Chandra said structural trends favour EVs over time. “ICE vehicle prices will keep rising faster due to regulatory pressures, while EV costs will gradually come down,” he said, citing ongoing work on battery packs, power electronics, and falling cell costs.
For now, GST 2.0 may moderate EV growth rates at the margin, he acknowledged. “Growth could slow slightly, but it will catch up again,” he said. “On one side, ICE prices are inflationary. On the other, EV cost structures are deflationary. That balance will restore EV attractiveness.”
In FY26, till November, Tata Motors dispatched 58,283 electric vehicles, up 36% year-on-year from 42,778 units in the same period last year.