Is this the right time to buy EV stocks? Here's what experts have to say

The Indian electric vehicle (EV) market is poised for significant growth, with estimates suggesting that it could reach $637.85 billion by 2032, growing at a CAGR of 65.44 per cent from 2023 to 2032, according to Precedent Research. Amidst the surging EV market, market experts are sounding the alarm for investors to seize the present opportunity and invest wisely in EV stocks.

"From now to the next five years, I see it as the best time for investors to consider EV stocks. The electrification of transportation is an unstoppable global trend. With governments worldwide promoting clean energy and consumers increasingly embracing electric vehicles, the potential for substantial returns exists," Ravi Singh, Market Expert told Republic.

Why invest in EV stocks?

India currently ranks 168 out of 180 countries in the Environmental Pollution Index. To combat this issue, the government has set goals for electric vehicle adoption, aiming for 100 per cent electrification by 2030. Experts suggest that the primary impetus driving the surge in interest in EV stocks is the need to address environmental concerns, particularly air quality.

Government incentives, such as subsidies for EV buyers, have further fuelled the EV market's growth. For instance, the Maharashtra government offers subsidies of up to Rs 1 lakh to EV purchasers, leading to a surge in EV sales in the state.

It is not just auto makers that will gain from faster EV adoption but the entire ecosystem like ancillary product makers and others also stand to benefit from boom in EV industry.

"It's not just auto manufacturers. The EV sector is vast, including various industries that fuel its massive growth. Manufacturing is just one part; we also have companies making charging stations, batteries, auto parts, and software needed for the EV industry to thrive in the future," said Chahal Vermaa, Investor and Finance Creator.

"Charging stations are provided by companies like Tata Power and Reliance IOC. Auto-centric companies such as Uno Minda, Sona BLW, and Gabriel India Limited have manufactured numerous components for EVs, including electric shock absorbers. Gabriel India is already developing products for companies like Ola Electric, Okinava, Bajaj Auto, and M&M," Vermaa added.

Top EV stocks

Reliance Industries: The conglomerate is involved in various sectors, including oil and chemicals, oil and gas, retail, digital services, and financial services. The company has investments in EV charging infrastructure in the country.

TVS Motor Company: A well-known name in the Indian two-wheeler market, manufactures motorcycles, scooters, and electric vehicles.

Tata Motors: Tata Motors is an international manufacturer of automobiles, offering a diverse portfolio of cars, SUVs, trucks, buses, and defence vehicles.

Indian Oil Corporation: The oil company has ventured into electric mobility, with a growing network of EV charging stations across the country.

Mahindra & Mahindra: A prominent player in the automotive and farm solutions sectors, is making strides in electric mobility.

Hindalco Industries: The metal flagship company is involved in the aluminium and copper businesses, which are crucial components of electric vehicle manufacturing.

According to market experts, companies like Tata Chemicals, Neogen Chemicals, and Himadri Specialty play a crucial role in making chemicals for EV batteries.

"When it comes to EV batteries, we have companies like Exide Industries and Amara Raja Battery that have developed a range of lithium-ion batteries specifically designed for EVs. But where do the chemicals for these batteries come from? Companies like Tata Chemicals, Neogen Chemicals, and Himadri Specialty play a crucial role. Additionally, software solutions by KPIT Tech and TATA Elxsi are contributing to the growth of this exciting industry. All of these companies are working aggressively in the EV space and should be on your radar if you wish to capitalise on this growing industry," Singh added.

The Indian electric vehicle market is set to soar | Image credit: Pixabay

Factors to consider before investing in EV-related stocks

Watch out for industry leaders: Research and identify the industry leaders in the Indian EV market. Understand market competition and trends to make informed investment decisions.

Thorough investigation: look beyond historical data and assess a company's potential for financial growth. Given the evolving nature of the EV market, historical data may not provide a complete picture.

Check M&A Activity: Keep an eye on mergers and acquisitions within the EV sector, as these transactions can significantly impact stock prices and market dynamics.

Verify government investment: Government support and initiatives play a pivotal role in the success of the EV market. Stay informed about government policies and investments in the sector.

Remove underperforming stocks: Be prepared to cut your losses. If a stock underperforms, it's essential to make the necessary adjustments to your portfolio by replacing underperforming stocks with higher-growth potential options.

"Considering the limited consumer awareness about EVs, investors should conduct thorough due diligence on individual companies, emphasising strong fundamentals and competent management, before venturing into EV stocks," said Sonam Srivastava, Founder and Fund Manager, Wright Research.