From Laggard to Leader!

The market has been on a hot streak, but it recently hit a speed bump. Now, it’s time for individual stocks with strong potential to get a chance to shine. As the dust settles after a steep correction, this sector has started flashing some serious green lights in the background.?

The New Policy

Forget gas stations, India is revving up to be the world's electric vehicle pit stop! With an extraordinary cut of 85% in import duty on electric vehicles priced at par or above $35000 ( roughly Rs. 29 lakhs in Indian terms)?

So, what are the basic requirements for an international company to be eligible for this subsidy??

• Manufacturers must invest a minimum of Rs 4,150 crore within three years to initiate local electric vehicle (EV) production.
• Importation of up to 8,000 EVs annually is permitted under this policy.
• Manufacturers are required to ensure that at least 35% of the components used in car production are sourced from local markets.
• The policy mandates achieving a 50% Domestic Value Addition (DVA) within five years of implementation.

India's electric vehicle (EV) sector is picking up speed, hitting over 1 million sales in just nine months of 2023. But most of these sales are from two-wheelers and three-wheelers, unlike the rest of the world where electric cars are the biggest sellers.

Meanwhile, countries like China are racing ahead with over 5.5 million electric cars sold in 2022 alone. This shows India needs to push harder to get more electric cars on the road and boost local EV parts production. These numbers clearly show India needs to step up its game in electric vehicles to compete globally.

So, why is India lagging behind?

India's electric car adoption lags behind the global surge for a few reasons. The high upfront cost due to expensive batteries makes them a tough sell in a price-sensitive market. Additionally, "range anxiety" is a real concern with India's limited charging infrastructure, especially for long journeys.? Furthermore, fewer electric car models are available compared to the global market, and some consumers might be unfamiliar with the technology. Finally, India's dependence on imported EV parts hinders affordability and creates production limitations. These factors combine to make electric cars a less attractive option for many Indian consumers.

What is range anxiety?

Do you get this weird sense of anxiety when your car is running on low fuel and the reserve sign pops up. Similarly, in an EV car, when the charge is about to run out, the weird anxiety that you experience until you reach the next gas or charging station is called Range Anxiety.

But even in this tough market, there a few success stories like Ather and Tata Nexon which showcase that adoption of EVs in India is quite a possibility.?

In the fast-paced world of electric vehicles (EVs) in India, Ather and Nexon EV have each carved out their own unique paths to success. Ather targeted the urban elite with their sleek e-scooters, loaded with high-tech features and supported by a network of charging stations across major cities. On the other hand, Nexon EV tackled the common concern of range anxiety by offering a long-range electric SUV, blending practicality with the familiarity of a trusted brand.

Both Ather and Tata Motors (the company behind Nexon EV) took charge of the infrastructure challenge by building their own charging networks. Ather spread their charging stations far and wide, while Tata strategically placed theirs near their own businesses.

Here is the Snippet of recent headlines which show the commitment of tata motors to develop EV infrastructure in India.

It states that Tata Motors has signed an MOU with HPCL to set up ?5,000 electric vehicle charging stations across India.

But the thing is, not all carmakers in India have a sugar daddy business in the background to support the EV business like Tata Motors.?

As a result, the government must step in, which is exactly what is happening right now.?

The government intends to introduce Fame 3.0 in India. Previously, these subsidies were intended to stimulate demand in the country, but the new FAME 3.0 is said to be based on Production Linked Incentives, which will stimulate the supply side of the sector. This would cover light commercial vehicles and research in the renewable energy sector. Such efforts and collaborations from all stakeholders can make EVs accessible across the country. The focus would be to incentivize the manufacturers to bring down their costs.?

Well, The best way to make money is see what the governments focus is on. With these signs, it's pretty clear that the government's latest hot favourite after PSU banks and Railways is the Green Revolution

So, the question lies: Who will benefit from this development?

This policy has the potential to attract major global players in the EV market, including Elon Musk‘s Tesla.

But , it's not just a one-horse race. VinFast - owned by the richest man in Vietnam- had signed a MOU with the government of Tamil Nadu in January this year. With the new EV policy, they are all set to commence operations in the country with imported, premium electric SUVs at “inclusive prices.”.

All this hype has Indian companies like JSW Group hitting the gas pedal too; they're teaming up with MG Motors to launch a hybrid car and build charging stations all over India

Now coming to our Midas Touch Watchlist for the EV theme:?

EV Batteries?

Exide Industries : A leading manufacturer of lead-acid batteries in India, now expanding into Lithium-ion technology for EVs through partnerships with global leaders.?

Amara Raja Batteries :? Renowned for its "Amaron" brand, focuses on power storage batteries and is also transitioning into Lithium-ion EV batteries.

Automotive Components?

Bharat Forge :?A diversified manufacturer known for forging components for internal combustion engines and operating in aerospace, oil & gas, and power sectors. To adapt to the shift towards EVs, they're strategically investing in EV technologies, developing components like electric motors and transmissions for electric vehicles. Leveraging their expertise in metal forming, Bharat Forge aims to manufacture critical EV components, ensuring relevance in the changing automotive landscape.

Motherson Sumi Wiring India : It specializes in automotive wiring harnesses, crucial for transmitting electrical power within vehicles, and is a Tier 1 supplier to major automakers globally. Despite EVs having different powertrain requirements, wiring harnesses remain essential for managing electricity flow.

EV Software?

KPIT Tech: KPIT is a leading IT consulting and product engineering company specializing in the automotive industry. They offer a wide range of services, including software development, embedded systems, and product design.Their engineering muscle lets them design entire EV systems - powertrains, controls, and software integration. They're an EV development powerhouse!

So, With a clear focus on electric mobility and a growing web of regulations, the Indian EV sector is poised for significant growth. This government push, much like the recent support for PSUs and Railways, presents a lucrative opportunity for companies that can adapt and thrive in this evolving landscape.

On that note, keep and eye out and do your own research before investing and if you liked our research do hit that subscribe button to stay updated about our upcoming newsletters.?