EV Sector Boom Explained. Which are the Best Electric Vehicle Stocks to Buy.Top 2 Electric Vehicle Stocks to Buy Now
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India is the third largest auto market after China and the US. EVs made
up 3% of new car sales in the country in the June quarter of 2023, after
doubling in just six months. The government seems to be at a tipping point for EV adoption. This is why India’s homegrown automakers have been investing heavily in electrification. A couple of domestic auto majors have lined up plans for EV exports. But India has yet to make its presence felt in the international market with powerful EVs.
This video shows How EV (Electric Vehicle) Boom will pan out in India. Also, we will discuss two good-quality EV stocks in detail. Do check out the full video.
5% seems to be the inflection point at which most technologies get
ready for mass adoption. The time it takes to get to that level varies
widely by country.
But once the universal challenges of car costs, charger availability and
driver skepticism are solved for the few, the masses soon follow.
The country seems to be at a tipping point for EV adoption. Which is
why India’s homegrown automakers have been investing heavily in
electrification.
For instance, domestic sales of EVs have more than doubled in the
past year. But they barely represent 2% of the total light-vehicle
sales in the last 12 months.
A couple of domestic auto majors have lined up plans for EV
exports. But India has yet to make its presence felt in the
international market with powerful EVs.
A World Bank analysis concluded that investing in the
charging infrastructure is 4 to 7 times more effective in EV
adoption; than providing upfront purchase subsidies.
The government has offered tax incentives and
production-linked incentives to encourage EV production.
Getting non-EV players to become part of EV charging value
chain could offer a massive push to EV adoption. Plus, fleet
aggregators should also be encouraged to operate EVs
across India.
The company has already installed and commissioned
4 fixed EV charging stations in Delhi. It has also rolled
out its battery swapping facility for two-wheeler and
three-wheeler segments.
Similarly, the International Energy Agency (IEA) has
predicted that India will have a third of global battery
storage capacity by 2040. Which means all the electricity
that is being produced will have to be stored effectively
for later use.
So, electric batteries are to this century what oil was
to the previous one. And battery makers that can
cater to both EV and other industries are the best
hedged to ride the boom.
The future of EVs in India seems very bright. The Indian
government wants to join the Electric Vehicle
Revolution and according to the sources, they plan to
have 30% of private cars, 70% of commercial vehicles,
40% of buses and 80% of two-wheelers and three-wheelers
go electric by 2030.
TataMotor , the order book does not capture the demand strength in the US,
Middle East and China. Further, its VME and FME are very low, which it plans to
increase to stimulate demand if it weakens in the latter part of the year.
The profitability in domestic EV (PV) business would improve in coming quarters on cost
reduction, PLI benefits and a rise in localisation.
The company will continue to witness margin pressure in
contractual business for a quarter and the residential
segment for the next two-three quarters. Residential
EBITDA margin is expected to improve to over 15% and
PAT margin will be in double digits
In 1QFY24 was 61%, up from 53% in 4QFY23. With three new product
programs lined up over FY24-26, it expects R&D capitalization to
stay in the 50-60% range for the next few quarters.
While M&M has acquired a 3.53% stake in RBL Bank at Rs. 417 crore, it believes its overall
capital allocation principal has not changed, given it considers automobiles, farm, IT,
financials as its key core areas.
The company’s key objective for an investment in RBL Bank is to understand banking
operations as it already owns an NBFC – Mahindra Finance
M&M continues to enjoy healthy demand in the SUV segment as it enjoys a
strong order book.
The company assumes that EVs would have 20-30% penetration in the
SUV portfolio by 2027.
M&M is expected to invest Rs. 10,000 crore in the EV business (MEAL) by 2027.
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