Top 5 Electric Vehicle (EV) Stocks By Market Cap in 2021 | Best Electric Cars Stocks

We have listed Top 5 Electric Vehicle (EV) stocks by Market Cap. We made the curation based on three categories such as Electric Vehicle Producing Stocks, Lithium-Ion Battery Manufacturing Stocks and Electric Vehicle Charging Infrastructure Stocks.

Hey friends! You all are really interested in Electric vehicles. All of you want to know about it as everybody talks about it. You want to know this industry's opportunities and challenges in the future. Also, you want to know about the companies directly/indirectly linked to the EV segment.

We will discuss this topic in detail so that after this article you have full information concerning Electric vehicles or companies or 5 stocks that trade on the market and have a focus on the EV segment.

Top 5 Electric Vehicle (EV) Stocks

India's auto industry is the 4 largest in the entire world. India's Auto industry is expected to move from 4th largest to 3rd largest by the end of 2021.

Besides, Auto industry contributes 7.1% to India's total GDP. The national mission plan for electric mobility 2020 is a research report that tells us that currently, two wheelers dominate India's total auto industry. This has a 75% contribution to the total volume. Also, it is considered that passenger vehicles dominate India's car market. As people's incomes are rising, the demand for passenger cars is expected to boost further according to this report.

After this, I will talk about Electric vehicles. The sale of electric vehicles is less than 1% out of total sales of the Auto sector. But some experts say that in the coming time this number will rise from 1% to 5%. But this is an expectation. It is not a fact, yet. In the coming times, we will know how this percentage will improve further. 5 lakh two-wheelers currently operate in India in the EV category. But the number of electric cars has not yet reached lakhs. Their number is in the thousands.

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Electric Vehicle (EV) challenges

Now let's talk about something quite important for you to understand - The challenges of the Electric vehicle segment that it can hope to overcome in the future.

The 1st challenge for this industry is that of charging infrastructure. Cars will be manufactured, people will buy them also, but with non EV cars, you stop at a petrol pump to add fuel. But in the case of Electric vehicles, the charging infrastructure has not developed on a sufficient level. This is a challenge for this industry.

In the coming time, we will see how this infrastructure will develop. Some companies have started working on this problem. The names of these companies are - Tata Power and NTPC. 

The 2nd challenge for this industry is the upfront cost. Assume that you go to buy a car. You get a diesel/petrol car for Rs. 5 lakh. But the same car in the electric segment will be for 10 lakh. Over here customer will take into concern his/her money involved. This is a challenge for the electric vehicle segment.

The upfront cost in terms of battery is quite high. Hence any electric vehicle increases the upfront cost for the buyer. Besides this when you buy a car, the component is quite important for you. We are still heavily dependent on imports for Electric vehicle segment components. Their manufacturing has not reached an appropriate level. 

These are some challenges for the entire EV segment that I discussed. But opportunities emerge out of challenges. These companies can overcome these challenges and can derive demand in this industry through various opportunities in the emerging times.

Electric Vehicle (EV) Demand

The first demand driver for an electric vehicle is the government's procurement. This can be a game-changer for demand and industry. It s expected that the government might change its policy and focus on four-wheelers electric vehicles (as national level/ other governments started procurement as in case of electric buses) This can result in a great demand boost. Besides this, a lot of big companies operate in India like taxi services. 

If they focus/procurement for the electric segment increase then a demand can be derived from here. You will know this in the coming times. This is a possibility that I wanted to share. 

The second demand driver emerges out of challenges. Assume that great technology comes in the future which reduces upfront cost or charging infrastructure gets developed. This can boost the private consumption of EVs in the coming years. This can drive demand. 

The next demand driver for the EV segment could be stricter emission norms. Because of this, different companies that manufacture cars had to make a lot of changes. This increased their production cost.

In the coming years, as the emission norms get strict, the demand for EV will automatically rise.

Next is the government's FAME2 Scheme. Under this initiative, the government has brought Rs.10,000 crore to be used for electric vehicles like procurement, charging infrastructure, etc. This step taken by the government is a signal that great traction can be there for electric vehicles.

According to a MarketWatch report, about 40% CAGR growth can be seen in charging infrastructure in the next 5-6 years. The government can support organizations in different ways that are developing charging infrastructure. So this was the information regarding the entire industry, electric vehicles where I told you about challenges and opportunities/demand drivers.

Best Electric Cars Stocks

Now, let's move to the second part of the article where we will discuss 5 stocks that are directly/indirectly linked to this industry. These 5 stocks are divided by me into three categories. 

The 1st category is auto manufacturing companies that produce EV vehicles.

2nd category is Lithium-Ion Battery Manufacturing companies (as I told you that the upfront cost of EVs is quite high due to the battery).

The 3rd category is the company that runs its business in EV charging infrastructure. Without taking much time let's talk about the 1st stock.

Mahindra & Mahindra

The first company that does EV manufacturing/can do expansion in this space is Mahindra & Mahindra. It is an automaker company of India whose business is well spread out in different sectors. This company manufactures passenger vehicles and tractors. In recent times, the company has given a remarkable return to its investors.

The passenger segment of India as I told you about in beginning, dominates the automobile sector. Mahindra & Mahindra has a 7.1% market share in this segment. Also, this company is considered a pioneer in the EV segment as it brought its first EV car in 2001. Its name was Mahindra Reva. So you can understand that this company started focussing on EV quite early. In recent times this company has opened its R&D centre in Bangalore that majorly focusses on EV manufacturing.

Not just Reva, but Mahindra & Mahindra manufactures 5 other electric vehicles. In recent times the company has also launched eVerito that is generally seen in taxis. Recently this car has been decently successful. Besides this, the company has announced other cars in the Auto expo that can operate in the EV segment.

In order to perform well in the EV segment, this company is trying to form a strategic alliance with global manufacturers. This company has already started talks in this regard. We will update you if there's any major development in this regard.

The share price of Mahindra & Mahindra is around Rs.736. Its market capitalization is around Rs.91,000 cr. In the last year, Mahindra & Mahindra has given 40% return to its investors.

I will not talk about the P/E ratio of this company as it is making a loss in the last 12 months. We will update you with the performance of the company from time to time. In the last year, this company has given a tremendous return to its investors. The debt-equity ratio of Mahindra & Mahindra is around 1.76.

Tata Motors

The second company is Tata Motors. Its name emerges whenever we talk about the EV segment. The total share of Tata motors in the passenger segment is 4.8%. Although this company has booked a loss recently, the shares of this company have given a great return to its investors in recent times.

Earlier also I have told you about Tata Motors. It has a huge dependency revenue on Jaguar and Range rover. You can watch our other video for this. But an interesting thing over here is that a 108% jump was seen in November sales of Tata Motors. In the EV segment, Tata Motors is a new entrant after Mahindra & Mahindra.

Its major focus area is electrical buses. The government had started procurement in this space. In the passenger segment, Tata Motors offers 3 EV cars namely Tigor, Tiago, and Nano. These three are EV variants that you can buy. Further Tata Motors has a huge focus on electric buses. It is expected that the demand of 4 lakh buses can be there in the coming time.

This is just an expected number where Tata Motors has a lot of focus. Over here, you would want to know the last three-quarter sales of three Tata Motors EV cars in the passenger segment. In the first, second and third quarter its EV sales were 300, 500 and 800 respectively. It is expected that in the fourth quarter that this number will rise from 800 to 1,400. The current share price of Tata Motors is Rs.183. The market capitalization of the company is around Rs.60,000 cr.

The last one-year return of this company was negative 0.33% for the investors. Tara Motors has a huge debt, as its debt-equity ratio is around 2.2.

Lithium-Ion Battery

The second category of stocks comes in the battery segment. The name of this segment is Lithium-Ion Battery. These batteries are used in EVs.

Amara Raja Batteries

I will talk about two such companies that manufacture these batteries/will do in the future. The first name is Amara Raja Batteries. This company makes lead-acid batteries that are widely used. Primarily these batteries are used in industries. Besides this, they are used in automobiles. The major areas where Amara Raja's batteries are supplied are telecom, railways, solar, etc.

The automobile sector replacement batteries have not seen much growth quite lately. But in recent times a pick-up has been seen in the automobile sector. This can lead to demand expansion. Let me quickly take you to my screen. I will show you the projections of replacement batteries as per the Society of Indian Automobile Manufacturers (as per Nomura estimates)

In 2016, about 16.3 million replacement batteries were used. In FY 2019 this number rose to 20.3 million. In FY 2020, this number was 22.2 million and in FY 2021 this number is expected to be at 23.5 million. So this was a discussion regarding lead-acid batteries. But as I told you that this company can manufacture Lithium-ion batteries in future. Hence this company has set up its production plant in Andhra Pradesh. Besides this, the company is closely working towards technology with the IIT-Chennai. The share price of Amar Raja batteries is around Rs.987. The market capitalization of this company is around Rs.16,000 cr. In the last one year, it has given more than 30% return to its investors.

The P/E ratio of Amar Raja batteries is 30. The industry has a P/E ratio of 46. This company is virtually debt-free. An interesting fact is that in the last 5 years its revenue and profit CAGR growth is above 10%.

Exide industries

Now let's talk about the fourth company on the list. It directly works in the lithium-ion sector. The name of this company is Exide industries. This company makes lead-acid batteries that are used in different industries and the automobile sector. This company has another business of life insurance. This is included in this company. Now let's talk about Exides's revenue breakup. As you can see on my screen the revenue breakup of Exide industries is visible.

Its 73% revenue is contributed by Automobile sector. After this major revenue is contributed by industries with 26% share. Exide has done a strategic alliance (Joint Venture) with a Switzerland company in a ratio of 75:25. This company has set up a plant in Gujarat in this regard.

They will manufacture Lithium-ion batteries in the future. The CAGR growth of total revenue for this company is 9%. While its net profit has grown at 5% as compared to Amar Raja Batteries which has shown a 10% CAGR growth in the last 5 years. The current share price of Exide batteries is Rs.193. In the last one year, it has given positive 7% return to its investors. The market capitalization of this company is Rs.16,000 cr.

The P/E ratio of this company is around 27. While the OEM industry has a P/E ratio of 46. As compared to this, the company has a low P/E ratio. As compared to the P/E ratio (30) of Amar Raja batteries this company has a slightly low P/E ratio. The debt-equity ratio is 0.07. The debt on the company is negligible. So this was the discussion regarding batteries. 

Tata Power

Now let's talk about the third category. Here we will talk about today's 5th stock.

The name of this industry is charging infrastructure. If electric vehicles operate well in the future then Tata Power will take the lead in developing charging infrastructure.

This is the largest integrated power company that runs a power generation, transmission business. In recent times this company is shifting its focus towards charging infrastructure. The energy generation of this company is 10,875 megawatts. Out of this 32% generation is from clean energy i.e. solar, wind, etc.

In relation to EV charging infrastructure, this company has set up 170 charging points. In the future, the company is thinking of expanding this. Another interesting thing about this company is that it has signed MoUs with petrol pump companies. Here I have used the word petrol pump as you can relate to this. As you have to go to the petrol pump for fuel, then if you get charging infrastructure over there itself, the EV vehicle charging problem would be solved.

Following this Tata Power has signed MoU with IOCL, HPCL, etc that operate petrol pumps in India.

The current share price of Tata Power is Rs.83. In the last one year, this company has given a great 47% return to its investors.

So in this article we talked about the EV segment and its 5 stocks.

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