DSIJ Mindshare

EV Market : Will it be lucrative for investors?

Indian automobile industry has reported 9.23 per cent growth in passenger vehicles (PV) segment during FY17 and the growth has continued during the first half of FY18. The PV segment is witnessing oil use vehicles being adapted to electric vehicles (EVs). This is in conformity with the government’s vision of 60 lakh electric and hybrid vehicles by 2020.

Recently, JSW Energy has signed an MOU with the Gujarat government with a capex commitment of Rs 4000 crore to produce 2,00,000 EVs every year, while Mahindra group has announced infusion of ~Rs.4000 crore in the EV space.

Also, India’s largest PV market player Maruti Suzuki has announced its greenfield investment of Rs 3900 crore, which includes a manufacturing set up of lithium-ion batteries.

Even the two-wheeler segment is not lagging behind. Hero MotoCorp came up with its interest in EV space by acquiring 26-30 per cent stake in Ather Energy for Rs 205 crore.

Regrettably, we do not anticipate Tesla to enter Indian market in the near term as the company is not able to fulfil its US orders given its current capacity.

We expect shrinkage in EV costs going forward and slowdown in import of ion batteries. Currently, EVs are taxed lower at 12 per cent GST rate as compared with 28 per cent on petrol/diesel vehicles.

The government’s launch of National Electric Mobility Mission Plan 2020 is aimed at saving fuel for reduction in pollution and gas emissions. This was a much-needed initiative to counter the deteriorating air quality level.   

Indian Oil Corporation has already opened its first charging station in Nagpur. Also, NTPC is looking at the possibility of obtaining national licence for setting up charging stations across India.

Thus, considering the given inflow of investments, India will definitely become a lucrative EV market going forward.

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