Why Indians are now turning to EVs faster than before
What's the story
Rising fuel prices in India could lead to a faster shift toward electric vehicles (EVs), according to Jay Kale, Executive Vice President of Research at Elara Capital. Kale said that higher petrol and diesel costs are likely to sway consumers who were already considering making the switch. "We are expecting strong growth for EVs both in two-wheelers and passenger vehicles," he added.
Growth forecast
EV penetration could increase by 2-3% per annum
Kale estimated that EV penetration could increase by "close to around 2-3% per annum over the next four-five years." He acknowledged that while fuel prices and vehicle price hikes do impact buying decisions, India's auto market is supported by lower ownership costs compared to pre-Goods and Services Tax (GST) levels. This, he said, should keep demand stable despite inflationary pressures.
Industry resilience
Kale expects EV, 2-wheeler industries to grow in FY27
Kale expects the EV and two-wheeler industries to grow by around 6-8% in FY27, despite automakers facing higher raw material costs and also softer margins in the near term. He noted that most auto firms have reported earnings "in line to marginally above estimate numbers," but margin pressure is likely this quarter due to higher input costs.
Stock performance
Eicher Motors reported 'steady set of numbers'
On the stock-specific front, Kale remained optimistic about Eicher Motors after its earnings. He said the company reported a "steady set of numbers" and announced plans to expand capacity from 1.4 million units to two million units over time. Despite concerns about inflation and pricing pressure in the broader auto sector, Kale said brands have already taken selective price hikes to counter rising costs.