Auto stocks witnessed a sharp session, rising up to 5% on April 13. The major catalyst was the unveiling of the Delhi government's draft electric vehicle (EV) policy, designed to curb urban air pollution. However, investor sentiment remained mixed, with concerns over potential supply chain disruptions linked to the Middle East war also weighing on index levels.
Delhi EV Policy Details and Incentives for Buyers
The draft EV policy for 2026 to 2030 outlines a massive push towards clean mobility across the National Capital Territory. It proposes a comprehensive exemption of 100% from road tax and registration fees for electric cars priced up to ₹30 lakh, effective until March 2030.The policy also earmarks a 50% concession for strong hybrid electric vehicles within the same pricing bracket. Furthermore, it introduces substantial scrappage benefits for consumers opting for EVs. Residents can claim up to ₹1 lakh incentive when trading in their old BS-IV and below vehicles for a new electric car.
Mandatory Electrification and Sectoral Shifts
A key structural component of the proposed framework involves mandatory electrification timelines. The policy mandates that all new three-wheeler registrations must be electric starting from 2027. This is followed by a similar requirement for two-wheelers beginning in April 2028.These rules also call for the phased electrification of various fleets, including school buses, government vehicles, and aggregator-operated vehicles. For goods carriers (N1 trucks), the draft offers a ₹50,000 scrapping incentive. Two-wheelers and three-wheelers, respectively, are set to receive incentives of ₹10,000 and ₹25,000 upon scrapping.
Analyst View on Long-Term Demand Drivers
Brokerages view the proposed policy as a potential long-term demand driver for the entire EV manufacturing ecosystem. ICICI Direct noted that the incentives for cars below ₹30 lakh are likely to significantly boost mass market adoption.The compulsory shift toward electric vehicles across key segments is expected to create a structurally large replacement cycle for manufacturers such as Tata Motors and Mahindra. Consequently, shares of specialized EV-linked companies like Ather Energy, JBM Auto, and Olectra Greentech saw advances of 5.2%, 1.9%, and 2.5%, respectively.
Mixed Market Signals and Sectoral Disparities
Despite the positive policy signals, the market showed significant sectoral disparities. Traditional automotive giants like Eicher Motors, Maruti Suzuki, and Hero MotoCorp declined sharply, shedding 5%, 4.6%, and 4%, respectively, on the Nifty Auto index.Experts caution that the potential ban on fossil fuel-powered two-wheelers from 2028 could weigh on makers like Bajaj Auto and TVS Motor. However, this potential slowdown is partially offset by the strong incentives expected to bolster overall electric vehicle sales in the coming years.
External Factors Dampening Investor Sentiment
Beyond the policy-driven movements, external geopolitical factors created caution in the market. The sell-off was exacerbated by the collapse of peace talks between the US and Iran over the weekend. This geopolitical development fueled a surge in crude oil prices, which negatively impacted overall investor sentiment across the broader auto sector.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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