Profitable business ideas 2022: Electric vehicles | Value Research In addition to environmental concerns, a host of central and state-level initiatives are shaping the electric-vehicle market in India
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Top trends to profit from in 2022: Electric vehicles

In addition to environmental concerns, a host of central and state-level initiatives are shaping the electric-vehicle market in India

Thanks to a significant rise in the sales of electric vehicles (EVs) in recent years, the global automobile industry is now standing on the threshold of a big revolution. In addition to environmental consciousness, a host of factors, including reduced production costs, the ease of maintenance and a consistent rise in fuel prices, have motivated both producers and consumers to switch to EVs. Further, since 1991, a whopping 97 per cent decrease in the price of lithium-ion batteries, which are used in these vehicles, has accelerated the popularity.

In India, the EV market is expected to grow at a massive 90 per cent CAGR in the next 10 years (as per an RBSA Advisors report). Even though EV sales account for only 1.3 per cent of the total vehicle sales in India, this segment presents a long runway for growth. This likely explains why investors across the world are vying to get a piece of the pie. Ola Electric raised $200 million, while Tata Motors' EV wing has raised $1 billion from TPG Rise Climate and Abu Dhabi's ADQ.

On the other hand, to promote the production and adoption of electric vehicles, the government has undertaken several initiatives, with some being the extension of FAME (the Faster Adoption and Manufacturing of Electric vehicles) Phase 2 till 2024 with a budgetary allocation of Rs 10,000 crore, setting up of 22,000 charging stations and a deduction of up to Rs 1,50,000 for the interests paid on the loans taken to purchase EVs under the section 80EEB. With all these, this segment is all set to present employment and growth opportunities.

Top trends to profit from in 2022: Electric vehicles

In focus: Tata Motors
Established in 1945, this leading automobile manufacturer deals in a wide range of vehicles, including cars, sports utility vehicles, trucks, buses and defence vehicles. It has a strong presence in both the domestic and international markets, with its acquisition of UK-based Jaguar Land Rover in 2008 strengthening its international presence.

While Jaguar Land Rover contributed around 78 per cent to its consolidated revenue in FY21, Tata commercial vehicles and Tata passenger vehicles contributed 13.3 per cent and 6.7 per cent, respectively. Despite being a large manufacturer, Tata Motors has been struggling to post profits since FY19, with its share price having grown by a mere 1 per cent CAGR in the last five years.

Nevertheless, the rise of EVs is expected to work in favour of the company, owing to its dominance in the EV market. Thanks to the popularity of Tata Nexon and Tata Tigor, the company enjoys a whopping 71 per cent market share in the four- wheeler EV segment. It has also planned to invest $2 billion in the EV segment in the next five years. Besides, Tata Motors benefits from the ecosystem created by its group companies, including Tata Power (for establishing and maintaining a network of charging stations), Tata Chemicals and Tata AutoComp System (for manufacturing batteries - the single most expensive component) and Tata Elxsi (for creating software services that make EVs more user-friendly). All these factors have set the company on a path of sustainable growth.

Also in our 'Top trends to profit from in 2022' series:

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Top trends to profit from in 2022: PSU divestment

Top trends to profit from in 2022: China plus one

Top trends to profit from in 2022: Digital disruption

Top trends to profit from in 2022: Artificial intelligence and machine learning

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