Tata Motors, M&M shares close higher on expectations of EV boost

According to the Society of Manufacturers of Electric Vehicles (SMEV), total four-wheeler EV sales reached 90,432 units in FY24, a 90.3 percent increase from FY23

Shares of electric four-wheeler companies, including Tata Motors and Mahindra & Mahindra (M&M), surged up to 2 percent on anticipation that Finance Minister Nirmala Sitharaman will likely announce new measures to boost EV adoption in the country.

Shares of Tata Motors, India's largest electric vehicle (EV) player in India, closed at Rs 1,003, up 2 percent from the previous close on NSE. M&M, one of the top-performing auto stocks on the Nifty, saw its shares rise over 2 percent to Rs 2,804.

Tata Motors and Mahindra & Mahindra are key players in the EV industry. Advocates argue that reducing focus on EVs could hinder India's climate goals and growth.

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According to the Society of Manufacturers of Electric Vehicles (SMEV), total four-wheeler EV sales reached 90,432 units in FY24, a 90.3 percent increase from 47,499 units in FY23. SMEV, a registered association representing Indian EV manufacturers and component makers, collaborates with the government to develop supportive policies for the EV ecosystem.

Industry experts also hope that the government introduces incentives for hybrid vehicles. If there's a development around the topic, shares of Maruti Suzuki, the only listed manufacturer of hybrid cars, will also be in focus. Maruti Suzuki shares gained 0.8 percent in today's trade. The company's is India's largest four-wheeler manufacturer.

Proponents of hybrid vehicles argue that they are a viable alternative given India's limited charging infrastructure. Currently taxed at 28 percent under GST, there was speculation that the tax rate might be reduced to make hybrids more affordable.

"There is an expectation for the government to introduce policies for new energy vehicles (NEVs), encompassing biofuels, plug-in hybrid vehicles (PHEVs), hybrid electric vehicles (HEVs), hydrogen, and flex-fuel vehicles," Rajat Mahajan, consulting partner at Deloitte, said. "The focus is shifting towards reducing emissions per vehicle and promoting a green energy transition. Comprehensive policies for NEVs will support this broader objective," he added.

Furthermore, extending production-linked incentive (PLI) schemes and reducing import duties could attract investments from foreign automakers and transform India into an export hub for advanced automotive technologies, according to experts.