The entire world is shifting towards electric vehicles to reduce the dependency on fossil fuels. India is no exception in the race. The electric vehicle is going to be the biggest revolution in the 21st century. Today in this article, I will discuss Electric Vehicle Stocks in India. Also, I will discuss how to invest in these stocks.
What is Electric Vehicle?
The electric vehicle is a vehicle that runs on electricity instead of the traditional internal-combustion engine that generates power by burning a mix of fuel and gases. Electric vehicle works by plugging it into the electric grid. It stores the electricity in the rechargeable battery that powers an electric motor to run the vehicle. Electric vehicles accelerate faster than vehicles with traditional fuel engines – so they feel lighter to drive.
Top Electric Vehicle Stocks in India
The Indian automobile industry is the 5th largest auto industry in the world. The industry will move to 3rd largest auto industry by 2030. Currently, the EV (electric vehicle) market holds less than 1% of the total automobile industry in India. But it is expected to grow multifold in the coming 10 years.
All automobile company is wanting to take advantage of this opportunity and want to eat the market share of electric vehicles in India.
In this article, we will discuss not only the EV manufacturers but also the whole EV infrastructure in India. Because without the EV infrastructure, the EV cannot sustain on roads. So there are basically two segments of EV, one is the final product of EV like two-wheeler electric bike and the second is the EV infrastructure and spare parts, suppliers.
Further, let’s break down the electric vehicles into different sectors like two-wheelers, three & four-wheelers,s, and commercial vehicles.
Indian two-wheeler market is comprised of 81% of the total automobile industry sale in the year 2020. So no automobile manufacturer can ignore this segment as its growth strategy. So you can now imagine the EV potential in the two-wheeler segment in India.
Secondly, the price of the two-wheeler EV is similar to the traditional two-wheelers in India. So there is no much price gap between them hence the potential of EVs in India is huge. With the increasing EV infrastructure, the next five to ten years will change all the traditional vehicles with EV.
The cost of running the EV is far lesser than the petrol/diesel vehicles in the same segment. So the choice is obvious to move to an electric vehicle in the coming years. The success of EVs in India largely depends on the EV infrastructure. In order for EV to get successful, the infrastructure needs to be succeeded first.
Let’s have a look at the companies in EV space in India.
Okinawa: It is a 100% Indian company that is manufacturing electric vehicles in India. The company was established in the year 2015 and ranked 1st in the two-wheeler EV segment in the year 2020. Unfortunately, the retail investors can’t invest in this company at this time as it’s not a publicly listed company yet.
Hero Electric: Hero is the subsidiary company of Hero Motocorp. The company gives tough competition to Okinawa and stood 2nd in the year 2020 for the two-wheeler EV segment in India. It is a publicly listed company so the retail investor can invest in this company.
Ather Energy: Headquarter in Bangalore and funded by Hero Motocorp is the new and upcoming startup. Ather Energy Pvt. Ltd. is an Indian electric vehicle company founded by Tarun Mehta and Swapnil Jain in 2013. It manufactures the electric scooter Ather 450X and the Ather 450 Plus. It has also established an electric vehicle charging infrastructure Ather Grid. It is not a publicly listed company yet so retail investors can’t invest in this company.
Bajaj Auto: Bajaj auto has entered into two-wheeler space with its legendary scooter brand Chetak. It is a public limited company so the retail investor can invest in this stock. It has future plans for coming up with more advance featured EV two-wheelers in India. Bajaj is a strong brand name when we talk about the two-wheeler in India. So this company has a brand advantage over the other companies which are new entrants in the two-wheeler segment.
TVS Motors: TVS motors has also launched its EV two-wheeler named IQUBE Electric. The first one from the TVS in the EV two-wheeler segment. Let’s see how can this model perform against the other EV in the same segment.
Mahindra Electric: Mahindra electric is the pioneer in electric vehicles in India. It has launched EV car e-Varito at a base price of ₹ 10 lakhs. Mahindra has also launched an e-auto in the passenger vehicle segment. Mahindra is a public limited company so the retail investor can invest in the stock of Mahindra Electric.
Tata Motors: Tata Motors is a well-known brand from the Tata Group of companies. It has launched the electric vehicle in the passenger vehicle and bus segment in India. Tata Motors cars are famous for passenger vehicles. It has launched Tata Tigor in the passenger vehicle segment at the base price of ₹ 10 lakhs. In the premium car segment, it has launched Nexon with a base price of 15 lakhs in India.
Recently the big bull Mr. Rakesh Junjunwala has purchased 4 crore shares of Tata Motors. This shows the potential of this stock to give a multi-fold return in the next 10 years.
NTPC (National Thermal Power Corporation): NTPC is planning to set up a 1 lakh electric charging station in India. This is the highest by any company so far. This can be a game-changer for NTPC. NTPC is generating power so it can easily set up charging stations and distribute power for charging EVs in India.
Reliance Industry: Reliance Industry has announced a plan to manufacture lithium-ion batteries in India. These batteries are used in EVs as charging batteries. Imagine the market size of the EV and the batteries need to charge all these EVs in India. Reliance is slowly migrating from its oil business to other like Jio and now this EV business in India.
Tata Power: Tata Power is a subsidiary company of Tata Group. It has announced to install 50 electric vehicle charging stations in Delhi. Tata Power is an electricity distribution company having a license in Delhi, Mumbai and recently they got a license in Odisha.
Tata Chemical: Tata Chemical also has a plan to soon enter into manufacturing of lithium-ion batteries in India. These batteries are used in EVs. This is the 3rd Tata group company which is associated with the electric vehicle industry. So there are 3 electric vehicle stocks from Tata Group. Tata chemical is planning to launch an integrated business model that includes, battery manufacturing, cell recycling & battery recycling.
Exide Battery: Exide battery has announced a joint venture with Swiss firm Leclanche to manufacture lithium-ion batteries and provide energy storage systems in India. Exide is a good old brand in the battery business in India. Now its time has come to show its real metal in the EV segment.
Amara Raja Battery: Amara Raja is the second biggest traditional battery manufacturer in India. It has announced a plan for making lithium-ion batteries to cater to the need for the upcoming electric vehicles in India.
Hurdles for Electric Vehicles in India
EV market in India is moving at a snail pace as there are many road blocks due to which the adaptability in Indian automobile industry is very low. Below are the reasons why EV segment is not catching up fast.
Lack of charging station infrastructure: To gain a traction in the automobile market, EV charging station plays a major role in India. Without charging station there is no meaning of launching EV on the road. It is like launching a car without a petrol pump availability.
Fear of mileage: People still have a doubt on the performance of the EVs. They are not sure how much is the exact mileage electric vehicle will give. They have a fear that if the battery runs out in the middle of the road, what will he do? where to find the nearby charging station?
Initial Cost: The cost of the electric vehicle is much higher as compared to the fuel vehicle. There is a vast difference in the four-wheeler segment where the difference is as high as 5 to 10 lakhs. For example, if you buy a Tata Nexon petrol version the cost would be somewhere around 7-8 lakhs. But the electric version of the same car would cost you 14-15 lakhs. So the initial investment is almost double than the fuel car.
Same is with the MG Hector model. The regular fuel version is costing you around 17 lakhs while the EV model will cost you 28 lakhs. The difference in the initial price i so high that payback period will be so long and in some case, you might not be able to recover the cost.
Here is the cost comparison between fuel vs electric car in India.
|Fuel Car||Cost||Electric Car||Cost|
|Distance covered / month||1000km||Full charge battery||30 units|
|Yearly distance covered||12000km||Avg. Unit cost||Rs. 7/unit|
|Petrol required in year||800 Ltr||Total cost for full charging||Rs. 210|
|Cost of petrol/Ltr||Rs. 85||Mileage||280km|
|Total Petrol cost||68000||Total electricity required||1286 units|
|Total cost of electricity||Rs. 9000|
As you can see from the above table that the running cost of the electric vehicle is much lesser as compared to fuel cost. But at the same time the initial price difference between two model is so high that the payback period would be around 7-8 years (depending on your monthly usage).
EV Stocks – Which one you should invest in?
After identifying the electric vehicle stocks in India, let’s check the fundamentals and technicals of these stocks to find out which stock is lucrative for investment and can become the multi-bagger stock in the coming years.
|Stock Name||PE Ratio||EPS||Debt to Equity||PB Ratio||Promotor’s |
|Return on Equity|
|Hero Motors||22||₹ 132||0.04||3.90||34.8%||30%|
|Bajaj Auto||22.8||₹ 161||0.01||4.48||53.7%||24%|
|TVS Motors||73.8||₹ 7.54||2.78||8.33||57.4%||24%|
|NTPC Ltd||8.23||₹ 11.7||1.16||0.84||51.1%||11%|
|Reliance Industry||32.4||₹ 66||0.42||2.07||50.5%||12%|
|Tata Power||35.6||₹ 3.90||2.03||1.52||46.8%||3%|
|Tata Chemical||35.3||₹ 262||0.51||1.46||38%||13%|
|Exide Battery||21.1||₹ 8.66||0.07||2.29||46%||14%|
|Amara Raja||24.6||₹ 34.8||0.02||3.72||28.1%||19%|
As you can see in the table above I have plotted various fundamental and technical data points of the companies in the EV business. In the above table green color denotes the positive and red denotes the negative marking for that particular parameter. If you check the maximum green is in Bajaj Auto followed by Hero Motors, Amara Raja Battery, and Reliance Industry.
I would surely go with these four stocks for my EV portfolio for the next 10 years. I am expecting at least two out of these four companies will become multi-bagger in the next 10 years. These are my personal views and not the investment advice in any terms. Please consult your investment advisor before investing in any of the above electric vehicle stocks. I am not responsible for any loss due to investment in these stocks in any means. This analysis is just for the information and not investment advice.
Remember that not all EV stocks will give you high returns, as per me, there are around 60% to 70% of the stocks will not give you great returns in the long run as well. There is no sure-shot gain the electric vehicle stocks in India.