• Ganesh

How to invest in India's Electric Vehicle(EV) space

There has been a lot of hype going around the electric vehicles, the Tesla stock price boom, Neo in China. Governments supporting the EV manufacturers and buyers etc.. This change is necessary and supposed to come as we can literally see the effects of climate change.

So, the electric vehicle space in India is not completely developed unlike in the US and China, India doesn't have its own Teslas and Neos. But the Indian EV sector is developing and which is why considering to invest in the electric future of India is a good idea.



Introduction

You all know what is an electric vehicle. It is simply a car or any other vehicle that runs using electricity. So what is special about EVs? Since it doesn't use petrol or diesel, it doesn't have to go through the combustion process that causes pollution and emits carbon dioxide gas. EVs don't have a combustion engine and hence zero pollution. That's the main reason for the push towards adopting electric vehicle


India and EV

Though EV's are popular it accounts for less than 1% of the car sales in India but there is a huge potential to grow up to 5% in the next few years. And that's why you should consider investing in India's EV space as this could be the fastest growing industry.

So, when it comes to the Auto industry in India, It's the 4th largest in the world and contributes 7% of India's GDP. well, that's pretty huge and the Indian automobile sector is estimated to grow 282.8 billion US dollars by 2026. This is why it is exciting to talk about the electric vehicles as it is the future and countries such as the US, China, and European countries, Electric vehicles have increased their market share in total Automobile sales and soon India will follow them.


So, In India 75% of the automobiles sold are Twowheelers and two-wheelers dominate the Indian market, and the car segment in India is dominated by small cars since most of the Indian population lives in the middle-class segment, small cars are more affordable. And that's why Tesla may not be able to dominate the auto sector in India as Tesla is a luxury car and only the top 1%(super-rich)of the Indian population can afford it.

So, the current trend might continue for electric vehicles as well ie, small affordable EV cars and two-wheeler EV's will have more sales.


Stocks

EV stocks can be classified into 3 types, i.e, Companies that produce EVs, companies that build charging infrastructure, and companies that manufacture batteries for Electric Vehicles.

  • Currently, Indian companies that manufacture EVs are Tata Motors, Mahindra and Mahindra.

  • Companies that manufacture lithium-ion batteries for EVs are Amara Raja and Exide

  • Tata Power, power grid build charging infrastructure.


Well, It is going to take a really long time to see most of the vehicles on the road be electric because of the challenges such as battery capacity and charging infrastructure but electric is the future. Do your own research before investing in any stock and this is not investment advice.