EV industry in India not relevant without subsidies, Bernstein notes: ANI

The journey of shifting to electric mobility is not going to be easy for automakers, because it is difficult to make profitable margins and get scale in the EV segment, as per a research report by Bernstein, ANI noted. 

The report stated that generating sufficient margins and scaling up in the EV space is difficult, even with major financial incentives. It further noted that several traditional auto firms are facing losses, with only a clutch of them slated to remain competitive in the long run. 

The report further noted that while some startups could survive, their long term market share will likely be limited, and instead, competition in the EV space will mainly be between established OEMs. 

According to Bernstein, Bajaj Auto and TVS Motors are on a similar footing in the EV sector, with Hero MotoCorp lagging behind. It has rated Bajaj Auto with "Outperform", with TVS, Eicher and Hero as "Market Perform." 

The report noted that Ola Electric, has managed to generate positive operating earnings (EBITDA) from premium models such as the A1 Air and the S1 Pro, but it is facing losses on its mass market model, the S1X. 

"Our analysis shows that Ola-E is generating positive operating EBITDA from premium models like the S1 Pro and S1 Air, while incurring a loss on the mass market model,  the S1X," Bernstein noted. 

The report further noted that the overall EV two wheeler industry generates around USD 1.3 billion in annual revenues, but incurs an estimated EBIT loss of USD 300- 400 million without incentives. 

Additional benefits from GST helped reduce the price gap between electric and ICE vehicles.

The report further stated that in the present scenario, the EV industry is dependent on government subsidies and incentives to a great extent. To remain competitive, the industry needs focus, large scale operations and major cost reductions to break the traditional ICE market. 

In conclusion, the report noted that dominant startups are likely to be mainstream, whereas traditional OEMs will continue to compete for market share in the EV space.