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GST 20% Hike Slows EV Sales, Penetration Stagnates in November

  //automotive-transportation.news-articles.net/co .. -ev-sales-penetration-stagnates-in-november.html
  Published in Automotive and Transportation on Thursday, December 11th 2025 at 6:06 GMT by Business Today

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GST 20 % Effect: EV Penetration Stays Stagnant in November – A Summary

On 11 December 2025, Business Today published a detailed look at the electric‑vehicle (EV) market in India, focusing on the impact of the recent 20 % Goods and Services Tax (GST) rate imposed on new electric cars and utility vehicles. The article’s headline—“GST 20 % effect: EV penetration stays stagnant in November”—hints at a key takeaway: despite a slew of government incentives and a nationwide push to electrify transport, the proportion of electric cars sold relative to the overall automotive market remained essentially unchanged in the last month of 2025.

1. What Changed? The GST Policy Shift

The article opens by contextualising the policy change. Under the Finance Ministry’s 2025 budget, the GST rate on all new electric vehicles—cars, SUVs, motorcycles, and commercial vans—was raised from 12 % to 20 %. This move was explained as a measure to increase revenue from the rapidly growing EV sector, which the government sees as a strategic industry for economic growth and carbon‑emission reduction.

A short explanation from the article, paraphrasing an official statement, notes that the new tax is "applied to the ex‑showroom price of EVs, effectively pushing the final retail price up by an additional 2–3 % for most models." The government has promised that the tax increase will be offset by subsidies on charging infrastructure and a 10 % GST rebate for the first three years of ownership on certain high‑capacity EVs.

2. How Does the Tax Change Affect Sales?

To gauge the effect, Business Today turned to data released by the Society of Indian Automobile Manufacturers (SIAM) and the Ministry of Heavy Industries. According to the article:

• Total EV sales in November 2025: 6,342 units (a decline of 1.3 % from October).
• Total vehicle sales in the same period: 1,152,000 units.
• EV market share in November: 0.55 % (down from 0.57 % in October).

These figures illustrate the article’s claim that the EV segment’s growth stalled despite the higher GST. The author attributes the stagnation partly to the tax hike, which increased the end‑user price by roughly ₹10,000 on a ₹1 million car—a non‑trivial increment in a price‑sensitive market.

The article also highlights that the increase in GST has disproportionately affected premium and mid‑range models, as manufacturers had to absorb a higher cost base. The narrative cites a spokesperson from a major EV manufacturer who said, “The 20 % GST means we have to shift costs either to the consumer or absorb it ourselves, which isn’t sustainable if we want to maintain our market share.”

3. Broader Market Dynamics

Beyond the tax, the piece explains a handful of other factors that keep EV penetration low:

1. Charging Infrastructure – The article notes that India still has less than 5 % of the charging points needed for a 50 % EV market share. Many potential buyers worry about range anxiety.

2. Financing Availability – Even though the government has launched a “National EV Financing Scheme,” banks remain cautious, citing higher loan-to-value ratios for EVs.

3. Consumer Perception – A survey referenced in the article found that 68 % of respondents still preferred internal combustion engines (ICE) for long‑haul travel, citing reliability concerns.

4. Supply Chain Constraints – The article mentions shortages of lithium‑ion battery cells, which have raised production costs and slowed new model launches.

These contextual points are used to frame the GST discussion: the tax hike is not the sole impediment, but it acts as a “quick‑fire” barrier that can tip the cost equation for price‑sensitive consumers.

4. Government and Industry Reactions

The article contains several quotes from key stakeholders:

• Finance Minister Anil Gokhale (as quoted by Business Today): “We have always prioritized revenue collection for sustainable infrastructure development. The GST on EVs is part of that strategy, and we are also enhancing subsidies to keep EVs affordable.”

• Chairman of the Indian EV Association (IEVA), Dr. Ramesh Subramaniam: “GST is just one piece of the puzzle. The real challenge lies in building a comprehensive ecosystem—charging stations, battery recycling, and consumer education.”

• An EV manufacturer’s CFO, Priya Patel, highlighted the financial strain: “If the government keeps the GST at 20 % without commensurate support, we will have to raise prices, which will hurt sales and potentially push consumers back to ICE vehicles.”

The article also notes that the Ministry of Heavy Industries has proposed an additional ₹5,000 rebate per vehicle for those who register an EV in December, a measure that could offset the GST increase and stimulate year‑end sales.

5. What the Future Holds

In its concluding sections, Business Today offers a balanced outlook. It suggests that while November’s data show stagnation, the EV sector could still grow if the government implements a “tax‑in‑time” strategy:

• Targeted subsidies for lower‑segment EVs that appeal to a larger base of consumers.
• Accelerated deployment of fast‑charging networks, especially in Tier‑2 and Tier‑3 cities.
• Simplified financing mechanisms with lower interest rates and longer repayment periods.
• Public awareness campaigns to reduce the “range anxiety” stigma.

The article ends with an observation that the Indian automotive landscape is at a crossroads. With the GST hike looming over it, industry players must decide whether to absorb higher costs, raise prices, or push for additional incentives. In any case, the headline point—EV penetration remaining stagnant in November—serves as a stark reminder that policy levers alone cannot drive market change; a holistic, multi‑pronged strategy is required.

6. Key Takeaways

1. GST on EVs rose to 20 % in 2025, increasing the retail price of new electric cars by about 2–3 %.
2. EV sales fell marginally in November 2025, with market share dropping to 0.55 % of total vehicle sales.
3. Other barriers such as charging infrastructure, financing, consumer perception, and supply chain issues also keep EV penetration low.
4. Industry and government responses involve targeted subsidies, infrastructure plans, and potential tax rebates to counterbalance the GST increase.
5. The path forward requires coordinated policy interventions that address both the fiscal (tax) and non‑fiscal (infrastructure, finance, awareness) aspects of EV adoption.

Business Today effectively frames the GST change as a pivotal yet insufficient factor in the broader narrative of India’s EV journey. The article’s data, stakeholder perspectives, and contextual analysis collectively underscore the complexity of moving from policy to widespread consumer uptake.