The company, known for models such as the Nexon and Punch EV, reported an 11.2 per cent year-on-year decline in wholesales or dispatches to dealers, totalling 42,778 units in the first eight months of the fiscal year through March. With only four months remaining, the company faces a challenging task in surpassing the FY24 sales of 73,844 electric vehicles. A decline in sales this year would represent a sharp reversal for Tata Motors, following a 48 per cent surge in FY24. This would also mark the first sales drop for the company since it entered the electric vehicle market in FY21.

The broader slowdown in the Indian car market, the withdrawal of certain state and central government EV incentives, and intensifying competition are all impacting Tata Motors' EV ambitions. Despite adding two new models—Punch.ev and Currv.ev—during the year, the company's performance has been weak.

This marks the second consecutive year that Tata Motors will miss the targeted 100,000-unit sales mark. N Chandrasekaran, chairman of Tata Motors and the Tata Group, had discussed the company's target to double EV sales in FY24 compared to FY23 during the company’s annual general meeting in July 2022. After missing that target, Tata Motors had hoped to achieve the milestone in the current fiscal year.

A Tata Motors spokesperson stated that the entire passenger car industry is witnessing stagnant growth in FY25, which has contributed to the slowdown in EV adoption. They also pointed to the discontinuation of central and state policies incentivizing EV purchases as a factor. Despite these challenges, the spokesperson emphasized that EVs remain the future technology for the passenger car industry, and as the market leader, Tata Motors is committed to developing the market for mainstream EVs.

Puneet Gupta, director at S&P Global Mobility, explained that changing EV incentive policies by state governments have affected sales. For example, Delhi and Telangana had halted incentives before later resuming them, while Maharashtra did not extend the incentives, and Haryana stopped them. Uttar Pradesh extended incentives to hybrids as well.

Gupta also acknowledged that, despite numerous challenges, Tata Motors has been recognized for leading the on-ground EV revolution. He pointed out that the registration duty benefits on hybrids offered by certain states have attracted customers, diverting them from EVs and potentially delaying further EV penetration in India. Additionally, concerns over charging infrastructure and range anxiety remain obstacles for people using EVs for intracity travel.

However, some industry observers believe that the slowdown in Tata Motors' EV sales is due to more than just the discontinuation of incentives and a sluggish market. An analyst at a brokerage noted that the overall market has slowed and is likely to end the fiscal year with only a 2 per cent growth compared to the previous year.