Why Used EVs Remain A Tough Sell In India

Battery Blind Spots Cloud India's Used EV Market

By Shubhangi Bhatia

What?

India's electric vehicle market is scaling fast. FY26 saw passenger EV retail sales surge 84% year-on-year to 1.99 lakh units. But as the earliest adopters, many of whom bought Tata Nexon EVs and MG ZS EVs three to five years ago, attempt to sell, the pre-owned market is encountering its most consequential test yet.

Most used EV listings on platforms like Cars24 fall between Rs 6 lakh and Rs 18 lakh, with demand concentrated in metros. At the luxury end, Big Boy Toyz reports a 25% rise in EV and hybrid inventory over the past 18 to 24 months, led by models like the BMW i7 and Mercedes EQS.

Across both segments, the story is the same: the market exists, but the scaffolding around it, including battery health standards, insurance frameworks, and valuation models, is still catching up.

Why?

The central problem is the battery, an asset that accounts for 40% to 50% of a vehicle's cost but has no standardised method of health certification in India. Unlike petrol cars, where age and mileage offer reliable valuation benchmarks, EV pricing depends on State of Health analysis, charging cycle history, thermal management checks, and real-world range, variables largely opaque to the average buyer.

Falling lithium-ion prices are meanwhile accelerating depreciation on first-generation models, while newer EVs with longer ranges and better technology erode demand further. Insurance adds another layer: used EVs cost more to cover than comparable petrol cars as standard comprehensive policies do not protect against natural battery degradation.

As Vikram Chopra, CEO of Cars24, told The Core, battery anxiety remains "the single biggest barrier to purchase."

Why It Matters?

At its core, this is a trust problem. And trust, as any market builder knows, is the hardest thing to manufacture and the easiest to lose. Analysts point to a unified Battery Health Certificate as the fix, a common framework that could bring transparency to pricing, insurance, and financing in one move.

"A common State of Health framework would improve buyer confidence, enable more accurate residual value assessment, and ease financing for pre-owned EV purchases,” Counterpoint's Abhik Mukherjee told The Core. But he does not expect the necessary infrastructure to be meaningfully in place before 2030.

In the meantime, several used EV transactions will happen anyway, with buyers and sellers navigating a market that runs, for now, with a blind spot at its core. Whether that is enough to sustain momentum, or quietly undermines it, is a question worth sitting with.

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4.39 lakh units

That is how many passenger vehicles India sold in May 2026, a 27% jump year-on-year and the highest-ever sales recorded for the month, as per data from the industry body Society of Indian Automobile Manufacturers (SIAM). Two-wheelers and three-wheelers were no different, rising 15% and 31% respectively, even as the West Asia crisis cast a shadow over global markets.

The Lead: For passenger vehicles, utility vehicles led the charge. Within two-wheelers, scooters led with 27% growth to 7.39 lakh units, while motorcycles climbed 7% to 11.13 lakh units.

Overview: SIAM Director General Rajesh Menon credited the momentum to a confluence of factors. "Lower base effect of previous May and demand created due to reduced GST rates, with easier financing, is again getting reflected in higher off-take this month," he said.

Peace In Our Time?

The United States and Iran confirmed a peace deal that ends months of intense conflict. President Donald Trump announced the agreement on Sunday. Both sides will formally sign the memorandum of understanding on Friday in Switzerland. 

The agreement halts fighting on all fronts, including Lebanon. It reopens the Strait of Hormuz for shipping and lifts the US naval blockade on Iranian ports immediately. Tehran described the deal as a significant step that ends the blockade and opens the door for broader talks on nuclear issues and sanctions relief within the next 60 days.

Impact: Global markets reacted positively. Oil prices fell sharply and stocks rallied on hopes of restored stability and energy flows.

The Lead: The rupee appreciated by 0.7% as crude oil prices eased and supply chain fears receded. Lower energy costs promise reductions in petrol, diesel, and cooking gas prices. 

The Congress party demanded immediate rollbacks from the Modi government and declared that the war excuse for high fuel prices is now over.

Indian pharmaceutical firms, which faced shortages of key raw materials like propylene due to Hormuz disruptions, now expect stabilized imports and lower freight costs within weeks. 

India's Wholesale Inflation Surges

India's wholesale price inflation jumped to 9.68% year-on-year in May, above Reuters' poll estimate of 9.05% and April's 8.26%, driven by the energy shock from the Middle East conflict, Reuters reported. Wholesale fuel and power prices surged 30.33% annually, with petroleum and natural gas prices soaring 61.51%.

Context: Despite the spike, economists do not expect an immediate impact on interest rates. The Reserve Bank of India, which targets 4% retail inflation, kept rates unchanged in June, signalling it will monitor second-round effects before tightening policy. Wholesale inflation remains sharply higher than retail inflation, which stood at 3.93% in May.

Forecast: There might be some relief as the US and Iran have agreed on a framework to end hostilities and reopen the Strait of Hormuz, pulling global oil prices lower. "The recent cooling in global energy and commodity prices after the easing of tensions in West Asia is expected to provide respite to the WPI inflation print for June 2026," ICRA's Rahul Agrawal said.

India’s Trade Deficit Narrows

India's merchandise trade deficit narrowed slightly to $28.21 billion in May from $28.38 billion in April, below Reuters' poll forecast of $28.72 billion. This was due to rise in exports to $45.2 billion while imports climbed to $73.41 billion, Reuters reported.

The Lead: US Trade Representative Jamieson Greer is scheduled to visit India on June 23-24 for further talks on an interim trade agreement. Trade Secretary Rajesh Agrawal said discussions would focus on "giving final touches to our interim deal," with Trade Minister Piyush Goyal earlier indicating a first tranche could be concluded by mid-July. The deal is also expected to feature in Trump-Modi talks at this week's G7 summit in France.

Setup: The potential reopening of the Strait of Hormuz following the US-Iran framework deal could significantly ease India's import bill. Since India imports over 80% of its crude and 60% of its cooking gas from the Middle East, easing tensions would reduce freight, insurance and energy costs. Textile industry body CITI called the US-Iran announcement "a shot in the arm" for Indian exporters.

Bracing For Uncertainty

Finance Minister Nirmala Sitharaman said the government is preparing additional measures to attract foreign capital into India, while warning that the economy faces uncertainty from foreign exchange volatility, oil and fertiliser prices, and a possible rainfall shortfall. 

Pivot: Speaking at the Mindmine Summit 2026 in response to a question from Motilal Oswal Financial Services (MOFSL) Co-Founder and Chairman Raamdeo Agrawal, she said the government and the RBI have analysed market trends and introduced reforms to make India's bond market more attractive to global investors. These steps include simplified compliance requirements and favourable tax treatment. 

Setup: Sitharaman also highlighted the RBI's decision to allow public sector undertakings and banks to raise funds overseas under a structured framework, with the central bank bearing currency-related hedging risks. She described the approach as a calibrated effort to ensure adequate investment flows into the economy, even as global uncertainties continue to pose risks to India's growth and financial stability.

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Oil Prices Hit 3 Month Low As Global, Indian Markets Rise

On Episode 902 of The Core Report, financial journalist Govindraj Ethiraj talks to Bharati Balaji, Deputy Director General at the All India Distillers' Association (AIDA) as well as Sourav Mitra, Partner – Oil & Gas at Grant Thornton Bharat.

• Oil Prices Hit 3 Month Low As Global, Indian Markets Rise

• Indian Merchandise Exports Hit A Record High At $42.5 Billion

• How Will India Be Impacted If The Iran-US Deal Stays

• Decoding India’s Ethanol Supply Systems As Govt Unveils Fresh Rules For Ethanol Blended Vehicles