Electric Vehicle Market In India And Best EV Stocks In India

As the union budget of 2024 favours green energy, its decisions effect the EV market as well, because both use similar components effecting bringing down the EV priceses making them more competitive with internal combustion engine (ICE) vehicle prices.

S.No.	Name	CMP Rs.	Mar Cap Rs.Cr.	1Yr return %	5Yrs return %	ROCE Prev Yr %	All time high Rs.	P/E
1.	M & M	2887.80	359125.42	99.52	38.61	12.69	3013.95	31.87
2.	Bajaj Auto	9470.00	264330.53	95.69	29.38	26.55	10038.80	33.02
3.	Tata Power Co.	444.65	142400.32	101.31	48.15	11.74	464.30	41.28
4.	Hero Motocorp	5475.45	109450.02	74.66	17.30	22.72	5894.55	29.03
5.	Exide Inds.	553.75	47064.39	116.52	24.57	10.24	620.35	55.58

Evolution of the Electric Vehicle Market in India

Unlike in western countries, where the EV revolution is all about 4-wheelers (4W), India’s EV revolution is slightly different. It is currently driven by shared mobility, i.e., the three-wheeler (3W) EV segment. According to Niti Aayog’s 2020 report, the 3W e-rickshaw contributed 79% of all EV presence in India. The sector has emerged as a preferred mode of transport within the city and towns as it offers a better value proposition. 

The second-most popular segment, the two-wheeler (2W) EV segment, has a market share of 17% of the EV population but is one of the fastest-growing EV segments. Between 2016-2020, the 2W EV segment has grown at a CAGR of 62%. And the entry of conventional players like TVS, Hero, and Bajaj, along with pure 2W EV manufacturers like Okinawa, OLA, Ather, Revolt, and others, have spiced up the segment. As for year 2024 the EV sales have increased by 5.4% when compared to the previous fiscal year.

Now, the 4W EV segment remains in focus and gets most of the attention from investors and industry people. India had its first stint with 4W EV in 2001 when Mahindra launched Reva, but it failed to take off due to higher pricing and design limitations. The road to 4W Electric Vehicle adoption was slow in India due to factors like range anxiety, lack of Electric Vehicle charging infrastructure, and pricing. Still, things changed when Tata Motors launched the EV version of its popular SUV Nexon at an introductory price of Rs 13.99 lahks in 2019.

EV sales in 2022 recorded a 210% increase to reach 1 million units for the first time, and the 4W EV segment clocked cumulative sales of 49,800 units, where Tata Motors’ market share is 72% in 2024.

Despite the early challenges, the Indian Electric Vehicle market has evolved rapidly and is expected to grow at a CAGR of 36% through 2030. Niti Aayog aims to achieve EV sales penetration of 70% in commercial vehicles, 30% in private vehicles, 40% in buses, and up to 80% in two and three-wheelers by 2030.

Why is India eyeing rapid Electric Vehicles adoption?

India is a signatory to the Paris Climate Agreement, in which more than 170 countries pledged to limit global warming to below 2 degrees Celsius, compared to the pre-industrial era. And, at COP21, India committed to reducing carbon footprints by 33-35% by 2030 below 2005 levels. So, why is Electric Vehicles adoption essential?

The transport sector in India is the largest consumer of fossil fuels and the second-largest emitter of CO2 worldwide. And, to meet the pledge to reduce CO2 emissions by 2030 and limit global warming, the government is focusing on electrifying the road transport sector. It has notified the National Electric Mobility Mission Plan 2020. It seeks to enhance the nation’s energy security, mitigate the adverse impact on the environment from the road transport sector, and promote domestic manufacturing of EVs.

Government Initiatives to Promote Electric Vehicle Adoption

For the rapid adoption of EV and domestic manufacturing, the government has focused more on targeted policy and financial incentives, such as:

FAME II scheme– As Electric Vehicles are priced higher than IC engine vehicles, the government is offering customers an upfront discount of up to 15% on the cost of the vehicle. However, to avail of the subsidy, the EV OEM or manufacturer has to prove that 50% of vehicle components are manufactured in India.

De-licensed public charging infrastructure: Any individual/entity is now allowed to set up public charging stations for EVs meeting the government’s technical and performance standards.

Other financial incentives: The government has announced a discount on the interest rate while availing a car loan to purchase an EV, a total exemption of road tax, a one-time registration fee waived, scrapping incentives provided on deregistering old ICE cars, etc.

Best Electric Vehicle Stocks in India (EV Stocks)

The stock market has shifted the focus toward auto companies manufacturing EVs and EV components. Many conventional players who have entered the electric vehicle market in India have seen their stock prices perform better than their peers. For instance, Tata Motors stock has given a CAGR of 28% in the last three years.

Let’s look at the Top Electric Vehicle stocks other than OEMs to consider.

Tata Motors (TAMO): Tata Motors is a prominent player in the Indian EV market. With a diversified portfolio that includes both passenger and commercial vehicles, Tata Motors has been driving innovation in the EV space. Tata comes with an upper hand in the EV market as they are also establishing a huge charging network for all EVs in India. The same reflects in the company’s revenue; it stood at Rs 3,45,966 Crores and Rs 4,37,927 Crores in FY23 and FY24 respectively

Mahindra and Mahindra (M&M): Mahindra & Mahindra has a strong presence in the four-wheeler EV segment, and is one of the most trusted 4 wheelers brands in India with a long legacy. Known for its electric SUVs and commercial vehicles, M&M continues to invest in sustainable mobility solutions. Its market cap is around Rs 3,59,106 crore.

Hero MotoCorp: As a leading two-wheeler manufacturer, Hero MotoCorp has ventured into the electric scooter segment. Its market cap is approximately Rs 1,09,450 crore.

Bajaj Auto: Bajaj Auto, known for its motorcycles, has also entered the EV market. Its focus on electric two-wheelers contributes to its market cap growth.

Exide Industries: Exide Industries, a battery manufacturer, plays a crucial role in the EV ecosystem. The EV revolution has been steadily increasing the company’s profit; it stood, Rs 822 Crores in FY2023, and Rs 882 Crores in FY2024.

Conclusion

With the government’s hand-holding through several policy initiatives, the Electric Vehicle segment in India is expected to mature rapidly. Through economies of scale, EV component manufacturing companies will become more competitive in the global market, benefiting Electric Vehicle stocks in India. And as the market matures, more companies are likely to enter the market, and Electric Vehicle Stocks will list in India.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQs

How big is the Electric Vehicle (EV) market in India?

According to fortunebusinessinsights.com, the India Electric Vehicle market size in 2021 was $1.45 billion and is expected to grow at a CAGR of 36% through 2030.

Which is the best Electric Vehicle stocks (EV Stock) in India?

Electric Vehicle Stocks (EV Stocks) like Tata Motors will benefit the most due to established products in passenger and commercial vehicle segments.

Why will Electric Vehicle stocks be successful in India?

Electric Vehicles provide a considerable cost advantage in terms of cost-per-km, and India aims to achieve EV sales penetration of 70% in CV, 30% in PV, 40% in buses, and up to 80% in 2 & 3W by 2030.