CHENNAI: Electric vehicle registrations in Tamil Nadu have surged over the past five years, driven largely by the state government’s policy of granting 100 per cent exemption from motor vehicles tax for battery-operated vehicles. However, the State’s electric vehicle adoption rate continues to lag behind several other States, including Maharashtra, Kerala, Karnataka and Gujarat, and remains below the national average.

With the tax exemption scheduled to end on December 31, 2025, industry stakeholders have begun urging the government to extend the incentive to sustain adoption and investment momentum.

Under the Tamil Nadu Electric Vehicles Policy, 2019, the government granted full tax exemption for all battery-operated transport and non-transport vehicles from November 3, 2020, to December 31, 2022. The benefit was later extended for another three years, from January 1, 2023, to December 31, 2025.

Official data show that electric vehicle registrations rose steadily from 11,936 in 2020-21 to 1,20,292 in 2025-26 as of December 19, reflecting sustained consumer interest. The policy has, however, had a notable revenue impact. The state government exempted motor vehicles tax to the tune of Rs 390.75 crore in 2023-24 and Rs 319.82 crore in 2024-25 due to electric vehicle registrations.

Industry representatives attribute the growth primarily to the road tax waiver, which applies to both commercial and private electric vehicles. The exemption, they say, has helped offset the higher upfront cost of electric vehicles compared with internal combustion engine vehicles, making them more affordable for buyers.

Karthikeyan Palanisamy, chief executive officer of Zeon Charging, said that the high initial cost continued to be one of the main barriers to wider electric vehicle adoption. Tax and registration fee exemptions, he said, had played a crucial role in reducing this burden and encouraging buyers to shift to electric mobility.

He pointed out that Tamil Nadu’s electric vehicle adoption rate stood at around 7.5 per cent. While this marked an improvement over previous years, it remained below the national average of about 8.5 per cent. Continuing supportive policies, he said, would be essential to close this gap.

He also warned that ending the tax exemption at a time when the Centre had reduced the goods and services tax on small entry-level cars could adversely impact electric vehicle adoption.

Calling for a more targeted approach if a blanket extension was not feasible, Palanisamy said the government should at least consider exempting electric transport vehicles such as taxis, e-rickshaws and goods carriers. Electric taxis that cover longer distances, he said, had greater potential to offset vehicular emissions and should be prioritised for tax relief.

Confirming that the industry’s request had reached the government, Industries Department secretary V Arun Roy said representations had been received and were under positive consideration. He added that the matter was being dealt with by the Home Department.