India’s Top EV Stocks: Generating Returns For Investors?

Top EV Stocks

Top EV Stocks

Tesla, Elon Musk’s electric vehicle and battery company, now dominates the electric vehicle (EV) market.
Who would have guessed that the company’s valuation would jump to over $650 billion by the end of the year, from $117 billion in January 2020? That, too, in a relatively short period of time.

Investors are looking for companies that will benefit from the EV disruption as a result of this precipitous surge.

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Investors can’t keep their hands away from companies even vaguely associated to this domain, even if it’s a loss-making company, with the Indian government firing cylinders for electrifying the vehicle sector.

As we all know, the auto industry will not be the only one to profit from this megatrend. Opportunities exist in a variety of industries. Many stocks have now become proxy plays for investors hoping to participate in the worldwide electric vehicle boom.

Let’s take a look at the top EV stocks in each category and see what type of returns they’re providing for investors in this post.

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#1 Commercial Vehicles

Tata Motors, Olectra Greentech, JBM Auto, Ashok Leyland, SML Isuzu, Eicher Motors, and M&M are among the top EV stocks in the commercial vehicle industry.

Tenders are being sought from state governments to purchase electric buses for public transportation. This gives electric bus manufacturers like Ashok Leyland, JBM Auto, Olectra Greentech, Tata Motors, and Eicher Motors a big boost in orders.

Tata Motors was one of the first businesses to produce an entirely self-contained electric commercial vehicle. It is almost ready to release its first electric truck. With a market share of more than 70%, Tata Motors is already the market leader in the electric passenger vehicle class.

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Olectra Greentech is a lesser-known electric vehicle stock. Electric buses, composite insulators, amorphous core distribution transformers, data analytics, and IT consulting are among its main interests. A healthy order book of 1,325 e-buses has been placed by the company.

Maharashtra’s environment minister, Aditya Thackeray, recently promised that by 2028, all of Mumbai’s public transportation buses will be electric.

This is a significant plus since the replacement of public buses with electric buses will provide chances for electric bus manufacturers.

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Let’s have a look at how these companies have done in terms of stock performance over the last 12 months.

Top EV Stocks
Top EV Stocks

#2 Two, Three, & Four Wheelers

This is the most obvious option for investors interested in the EV market. Choose firms that make electric vehicles in the two-, three-, and four-wheeler sectors.

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Tata Motors is in the 4-wheeler market, while TVS Motors, Bajaj Auto, Hero MotoCorp, and Greaves Cotton are among the 2 and 3-wheeler manufacturers.

Despite significant gaps in the 4-wheeler EV industry, such as a lack of goods, excessive pricing, and insufficient batteries, companies have huge aspirations for the future.

Two-wheelers dominate the Indian automobile market, accounting for 75 percent of all cars sold in the country. India’s domestic two-wheeler manufacturers are accelerating their electric vehicle ambitions in order to acquire reasonable market share in the future years.

India is undergoing an electric vehicle revolution, with high adoption rates in the 2/3/4-wheeler segments and growing interest in the private 4-wheeler sector.

Here’s how the segment’s best-performing stocks fared this year.

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Top EV Stocks
Top EV Stocks

#3 EV Battery Makers

Electric vehicles are powered by lithium-ion (Li-ion) cells. The most expensive component in an EV is the battery, which accounts for 40-50 percent of the total cost. These batteries have revolutionised how goods are designed in today’s environment.

Lithium ion batteries are being heralded as the future of car energy, and properly so, given their inherent benefits. Lithium ion batteries, for example, are substantially lighter than other rechargeable batteries and keep their charge exceedingly well while delivering steady energy production.

The rising use of electric vehicles in India would increase the demand for lithium ion battery production.

Most electric vehicle manufacturers currently import cells and batteries from China, which is the world’s largest supplier of lithium-ion cells.

Companies, on the other hand, are speeding up plans to manufacture lithium-ion cells in the country, expecting to take advantage of government incentives worth Rs 18,000 crore.

Amara Raja Batteries, Exide Industries, and Kabra Extrusion Technik are the market leaders in this area. Although Amara Raja and Exide get the lion’s share.

The following graph shows how the stocks have performed over various time periods.

Top EV Stocks
Top EV Stocks

#4 EV Charging Infrastructure

Charging ports are the next most significant component in electric vehicles, after lithium-ion batteries.
EV manufacturers are putting a lot of money and effort into charging station infrastructure.

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The market for electric vehicle charging stations is expected to reach $29.7 billion by 2027, with a CAGR of almost 40% between 2020 and 2027.

In order to accelerate the adoption of electric vehicles in India, the government plans to deploy up to 70,000 EV chargers over the next few years. The work has already begun.

Using the 70,000 gas pumps, at least 22,000 electric vehicle charging stations will be installed. Oil firms such as Indian Oil Corporation and BPCL have already committed to installing 17,000 electric vehicle charging stations through their outlets.

To take advantage of this potential, businesses are partnering with startups. Hero Electric has already announced a partnership with Charzer, a Bengaluru-based electric vehicle charging startup, to build one lakh charging stations across India.

Tata Power, Indian Oil Corporation (IOC), BPCL, Reliance Industries, NTPC, and Power Grid Corporation are among the leading listed firms in this industry.

Here’s how the above stocks from the charging infrastructure segment have performed this year.

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Top EV Stocks
Top EV Stocks

#5 Chemicals

Chemical companies have entered the lithium-ion battery business to expand the speciality product market, with plans to develop an integrated operation that encompasses cell manufacture, battery recycling, and battery production.

Tata Chemicals, Gujarat Fluorochemicals, Neogen Chemicals, and Tatva Chintan Pharma are among the leading companies in this sector.

Gujarat Fluorochemicals has entered the new age market, producing chemicals and fluoropolymers for electric vehicles, batteries, solar panels, and hydrogen fuel cells. The firm is currently constructing an integrated battery chemistry complex.

Meanwhile, Tatva Chintan Pharma is India’s sole distributor of chemicals used in the production of zeolite crystals, which are utilised in the production of detergents, air purifiers, and dietary supplements.

Here’s how the stocks have performed over different durations.

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Top EV Stocks
Top EV Stocks

#6 Auto Ancillaries

In areas such as wiring harnesses, rearview mirrors, cockpits, bumpers, and more, Indian auto auxiliary companies are collaborating with global competitors.

Sona BLW Precision, Motherson Sumi, Suprajit Engineering, Minda Industries, and Fiem Industries have all announced EV technology acquisitions or are expanding their component business with an eye on the worldwide market.

Component manufacturers are realising that investing in electric vehicle component technology and capacity is a need.

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Here’s how the top companies have rewarded investors over the past one year.

Top EV Stocks
Top EV Stocks

#7 Commodities

Demand for resources such as lithium, cobalt, copper, and nickel is already increasing as EV demand grows.

There could be a supply shortage because these metals are restricted and are the most often utilised metals in the production of electric car batteries.

Hindustan Copper is placing a large bet on electric vehicles to boost demand growth. The production of electric vehicles will use four times as much copper as typical internal combustion engines. This is good news for Hindustan Copper, NALCO, and Hindalco, among others.

The transition from internal combustion engines to electric vehicles will help these industries tremendously, as copper and aluminium will be the primary materials utilised in EVs.

Here’s how much you would have now if you had invested ₹ 100 in each stock a year back.

Top EV Stocks
Top EV Stocks

#8 Software (R&D)

Automobile manufacturers are increasing their technological expenditures by spending more on research and development (R&D).

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According to projections, automakers’ spending is predicted to rise by 6.5 percent on average, with a concentration on software.

Automakers and component manufacturers are increasing their R&D expenditures on projects to improve driver assistance and industry 4.0 capabilities, according to Tata Elxsi’s annual report.

For the development of next-generation hybrid vehicles, the business is collaborating with key OEMs and systems suppliers.

Meanwhile, L&T Technology has a competitive advantage over its competitors due to its concentration on disruptive businesses. It has made investments in electric, autonomous, and connected vehicles, as well as medtech, 5G, AI, and digital products.

Here’s how Tata Elxsi and L&T Technology have performed over the year gone by.

Top EV Stocks
Top EV Stocks

#9 PET Film Manufacturers

Did you know that the electric vehicle sector uses thin polyester (PET) films with packaging?

Polyester film is used in lithium-ion batteries to control energy and power density, as well as to improve the battery’s safety and life cycle.

Here are the top companies involved in this space and their performance over different durations.

Top EV Stocks
Top EV Stocks

Why EV stocks will continue to generate massive returns

There’s a reason for all the excitement surrounding electric vehicle stocks. EVs are gradually displacing internal combustion engines (ICE).

As we’ve seen, the shift to 100 percent electric vehicles will open doors for not only EV manufacturers, but also a variety of other EV players.

All you have to do is invest in the correct electric vehicle stocks, which can make you a fortune.

Fortunately, Equitymaster’s research has identified a little-known technique to profit from this gigantic 15x electric vehicle potential.

So, before you put a single rupee into any EV stock, we strongly advise you to watch this video and review the findings of our most recent research project.

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