Automotive Deal Volumes Drop, Investment Remains Focused on EVs and Mobility Tech

India's automotive dealmaking slowed sharply in the second quarter of 2026 as investors adopted a more selective approach amid global economic uncertainty. However, capital continued to flow into mobility technology, electric vehicle (EV) businesses and software-led automotive companies.

According to Grant Thornton Bharat's latest Automotive Dealtracker, the quarter recorded 20 transactions valued at USD 717 million, marking the lowest quarterly deal volume since Q2 2023. While transaction numbers nearly halved from 35 deals in the previous quarter, deal values slipped only marginally by around 4 per cent as investments remained concentrated in a handful of large transactions.

The consultancy attributed the moderation to an increasingly uncertain operating environment shaped by evolving global trade policies, geopolitical tensions, supply-chain realignments and tighter capital allocation. At the same time, it noted that long-term structural themes such as electrification, connected mobility, localisation and software-defined vehicles continue to attract investment.

H1 Deal Activity Declines Despite Continued Investment
For the first half of 2026, the automotive sector recorded 55 transactions worth USD 1.46 billion, compared with 59 deals valued at nearly USD 2.8 billion during the second half of 2025.

Grant Thornton Bharat said the decline reflects a shift away from broad-based investment towards businesses with differentiated technologies, established operating performance and clearer paths to profitability and scale.

According to the report, investors are increasingly favouring companies operating at the intersection of mobility, software, electrification and advanced vehicle technologies rather than traditional automotive manufacturing businesses.

Private Equity Continues to Dominate
Private equity remained the biggest contributor to automotive funding during the quarter, accounting for 13 deals worth USD 341 million, representing roughly 72 per cent of total deal volumes and 71 per cent of overall deal value.

Although PE activity declined significantly from the previous quarter, the report noted that investment remained concentrated in a limited number of larger transactions, indicating a cautious deployment strategy.

Mobility-as-a-Service (MaaS) emerged as the largest recipient of capital during the quarter after Rapido raised USD 240 million from Prosus, WestBridge Capital and Accel. The transaction was the largest PE investment during Q2 and reflected continued investor interest in scalable mobility platforms with established market positions.

Beyond ride-hailing platforms, investors also directed capital towards companies supporting the broader EV ecosystem, including charging infrastructure, fleet electrification, battery technologies and energy management solutions.

Notable PE transactions during the quarter included investments in JBM Ecolife Mobility (USD 47 million), Exponent Energy (USD 21 million), Simple Energy (USD 13 million) and Astranova Mobility (USD 6 million).

The report observed that investors are increasingly shifting from early-stage experimentation towards businesses demonstrating commercial traction, operational execution and scalable business models.

M&A Focus Shifts Towards Automotive Software
Merger and acquisition activity remained relatively muted with five transactions valued at USD 138 million, although average deal size increased sharply owing to a single large acquisition.

The report said KPIT Technologies' acquisition of Israeli cybersecurity specialist Cymotive Technologies for USD 120 million accounted for approximately 87 per cent of total M&A value during the quarter.

Grant Thornton Bharat noted that the transaction reflects the industry's growing emphasis on automotive cybersecurity, software-defined vehicles and connected mobility capabilities as OEMs continue integrating software into future vehicle architectures.

Besides cybersecurity, acquisitions continued to target electric powertrain technologies, mobility solutions and specialised engineering capabilities rather than conventional manufacturing scale.

The consultancy also observed that cross-border acquisitions are increasingly being used to access intellectual property, specialised talent and advanced automotive technologies not readily available in domestic markets.

EVs, Mobility Platforms Continue to Attract Capital
Electric mobility continued to remain a key investment theme throughout the quarter.

While EV companies accounted for the largest share of PE transaction volumes, Mobility-as-a-Service generated the highest investment values. Investors also broadened their focus beyond vehicle manufacturers to companies involved in charging infrastructure, battery optimisation, fleet management and energy solutions.

Grant Thornton Bharat said valuation premiums remain concentrated among category leaders capable of demonstrating differentiated technology, strong execution and clear pathways to profitability.

The report added that funding conditions remain more disciplined than in previous years, with investors increasingly favouring businesses capable of delivering sustainable returns rather than pursuing aggressive expansion.

Public Markets See Revival
After a quiet first quarter, public market fundraising returned in Q2 through two qualified institutional placements.

Ather Energy raised USD 156 million, while Ola Electric secured USD 81 million, taking combined public fundraising during the quarter to USD 238 million.

Grant Thornton Bharat said the QIPs indicate continued investor appetite for established EV companies despite the broader moderation in deal activity.

Sector Outlook
Looking ahead, Grant Thornton Bharat expects investment activity to remain concentrated around long-term mobility themes, including electrification, software-defined vehicles, mobility platforms and advanced automotive technologies.

The consultancy said policy initiatives supporting manufacturing and localisation, along with the recently concluded India–UK Comprehensive Economic and Trade Agreement (CETA), could improve market access for Indian automotive component manufacturers and engineering companies while creating opportunities for deeper collaboration in manufacturing and research and development.

However, it cautioned that geopolitical developments, supply-chain resilience, evolving emission regulations and critical mineral security are expected to remain key factors shaping investment decisions over the coming quarters.