iconiifl-logo-icon 1

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

Deceleration in electrification rates in Auto Sector: IIFL Securities

23 Nov 2023 , 10:40 AM

Electrification rate has moderated in 2W and PV. In case of 2W, moderation started post cut in FAME subsidy. No such specific reason can be attributed to PVs. The 2W EV industry has seen significant consolidation, with four players now accounting for >75% share. Bajaj has made rapid strides, up from 5% mktshare in FY23 to 13%, to claim the No. 3 spot from Ather. Based on Ather’s FY23 Annual report, analysts of IIFL Securities estimate ‘revenue per unit’ was lower than variable cost, implying negative contribution margin. Ola also clocked a sizeable operating loss in FY23. With reduction in subsidy effective June 2023, profitability may remain a challenge. Unlike 2W EV start-ups, Tata reported a small Ebitda loss (-5%) in its PV EV business. The contrast may be due to PV EV OEMs pricing products closer to cost, and an existing large revenue base, making overhead absorption easier. 

Electrification rates moderated in recent months: 

Electrification in 2Ws came off from Jun 2023, post the reduction in FAME subsidy. The current electrification rate at ~4.5% is almost at the same level as in FY23. In PV, electrification stood at over 2% in early FY24. Since then, the rate of electrification has moderated to ~1.7% in recent months. Unlike 2Ws, where moderation can be attributed to lowered subsidy, no such reason can be attributed to the case of PVs. 

Bajaj has made rapid strides in recent months: 

Top 4 players (Ola, TVS, Bajaj, Ather) account for >75% market share in 2W EVs. Bajaj has made rapid strides, ramping up from 5% share in FY23 to 13% in recent months. This is higher than its ICE mkt-share of 12%. Having overtaken Ather, Bajaj now stands at No. 3. Hero Moto’s share (although still low) has started inching up, from near-zero in FY23 to 3% in recent months. 

2W EVs – profitability is a challenge: 

Based on Ather’s Annual Report, analysts of IIFL Securities estimate FY23 revenue per unit (including subsidy from govt.) fell short of variable costs, implying negative contribution margin.= Gross margin (before variable overheads) was +9%, while Ebitda margin was negative at -40%. As per news reports, Ola clocked operating loss of USD136mn in FY23, on a rev of USD335mn. With the reduction in FAME subsidy from June 2023, profitability may remain a challenge. Tata’s EV business (cars) clocked a negative Ebitda margin of only -5% in FY23. Analysts of IIFL Securities believe the contrast is attributable to two factors: (i) PV OEMs do not rely on subsidies, and seem to be pricing the products closer to cost, (ii) Larger ICE OEMs have large existing revenue base, which makes it easier to absorb overheads.

Related Tags

  • Auto
sidebar mobile


Read More

Most Read News

4 Mar 2024   |   09:10 AM
4 Mar 2024   |   06:22 PM
4 Mar 2024   |   08:40 AM
4 Mar 2024   |   06:37 PM
Read More
Knowledge Centerplus

Logo IIFL Customer Care Number
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

Knowledge Centerplus

Follow us on


2024, IIFL Securities Ltd. All Rights Reserved

  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.