‘Tapering EV incentives give industry time to lower costs, build infra’ — M&M, Bajaj Auto, TVS Motor in focus

The firm pointed out that EV OEMs have been able to reduce pricing significantly over the past few months with the benefit of lower battery prices and cost reduction.

Nomura believes that further support for EVs will continue once the new government is formed after the elections. “We believe the government’s intent to support the EV industry should ensure that industry participants continue to invest in the ecosystem with confidence,” it said.

The scheme is aimed at promoting the sale of electric two-wheelers, three-wheelers and e-rickshaws. However, the brokerage is of the view that it would have been ideal to continue supporting other forms of public transport such as e-buses and e-PVs (taxis). “We will await the detailed notification on the scheme to confirm this,” it noted.

Reflecting on specific stocks, it said that EV component suppliers such as Sona Comstar (on which it has a buy rating) and Unominda (buy rating) will be the key beneficiaries of the government’s continued focus on electrification.

In its OEM coverage for three-wheelers, Mahindra & Mahindra and Bajaj Auto should benefit.

Among two-wheelers, TVS Motor, on which the brokerage has a neutral call, Bajaj Auto, and Hero Motocorp (Neutral) should benefit, and in that order.

According to the brokerage, in case there are no incentives for e-PVs and e-buses in the final notification, this may hurt EV adoption in these segments for OEMs such as Tata Motor (Buy), Ashok Leyland (Buy) and Eicher Motor (Neutral).