EV stocks vroom up to 253% in 1 year. Should you invest?

Notwithstanding the postponement of Tesla chief Elon Musk's visit and potential investment in India and a slowdown in EV sales globally, longer-term investors are sensing enough opportunities in the Indian electric vehicles ecosystem. In the last year, EV-themed stocks have rallied up to 253% with at least 5 of them giving multibagger returns.

The possibility of US tariff actions on Chinese EV companies this week by the Joe Biden government will also attract market attention in the favour of Indian companies.

Shares of Hindustan Copper, which is seen as one of the beneficaries of the growing EV adoption, have rallied 253% in the last year. Other EV stocks that have more than doubled investor wealth in one year are Himadri Speciality Chemical, Servotech Power Systems, JBM Auto, and Exide Industries.



Homegrown Tata Motors dominates India’s EV market with its Tiago, Nexon, Tigor, and Punch models, followed by MG Motor India, and Mahindra & Mahindra.

M&M plans to launch five all-electric SUVs in India based on its new, purpose-built electric platform, INGLO, starting in December 2024.

"With incentives like a 5% GST rate and road tax exemptions, EV penetration in the luxury segment reached 4% in 2023. Tata Motors leads India's EV market with a 72% share, while Tesla dominates the US market with 55%, but Tata Motors prioritizes segment growth over market share dominance," said Dr Nishant Srivastava, CEO, Torus Private Wealth.

Nomura analysts Indian OEMs have built strong competencies over the years and have demonstrated market share gains across segments vs global competition.

"One of the reasons for their success has been their ability to understand consumer trends and adapt faster with lower development costs. They have also shown more commitment to electrification in India in their model cycles than the global OEMs, so far," it said.

Earlier in March, the government announced an Electric Mobility Promotion Scheme to promote the sale of electric 2Ws, 3Ws, and erickshaws.

"We believe that further support to EVs will continue once the new government is formed after the elections. We believe the government’s intent to support the EV industry should ensure that industry participants continue to invest in the ecosystem with confidence," said Kapil Singh of Nomura.

To attract the likes of Tesla to India, the government has also introduced a new policy that allows 8,000 units of electric vehicles above $35,000 (Rs 29 lakh) to be imported annually at a lower duty of 15% vs 70-100% currently for 5 years against an investment of $500 million for local manufacturing.

The import of EVs below $35,000 would continue to attract import duty in excess of 70%, thereby protecting Indian OEMs operating in that price point.

EV penetration in India remains low (2.3% of all passenger vehicles sold) due to consumer concerns over affordability, range anxiety, and inadequate charging infrastructure.

Anand Rathi analysts believe that both charging infrastructure and battery-supply chains are at a nascent stage in India. "We are negative on listed battery companies Exide and Amara Raja because of the uncertainty regarding the long-term outlook on competition and margins," the brokerage said.

(Data: Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)