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Feb 20 15 tweets 4 min read
The great #EV transition is one of the the biggest disruptive shifts of the 21st century. Here's Richa Agarwal on how this is playing out right now... Image
To understand the triggers for this shift, we need to go back in history. In the late 19th century, one-third of American cars were electric. However, the discovery of cheap oil and mass production of internal combustion engine (ICE) shrunk the share from 33% to almost nil.
Well, the wheels are turning again. And this time, it’s EVs that will propel and dominate the auto sector. I’m not just counting on the policy push, which is helping the transition for sure. Nor I’m betting on the pollution control commitments.
The biggest reason for this transition will be battery costs. The cost of the battery that comprises nearly 30-40% of the vehicle, has come down by 89% in the last decade. In next 2 years, it’s expected to decline further by 20%.
At this price, EVs will be cheaper than ICE vehicles, making their mass production economically viable, not just for EV makers, but for the consumers as well.
To understand how big this opportunity is for India, let’s see how this revolution has unfolded in economies that are ahead of us in EV shift. Image
There are two ways you could look at this chart. The first is that the glass is half empty. The second is that low penetration so far makes the EV opportunity much bigger for India - a country with the highest young population.
With a big policy push, the Paris agreement to bring down pollution, investments in EV production & charging infrastructure, sharp decline in battery costs, shift in consumer sentiment & the recent discovery of Lithium deposits in India, the mass production of EV in India is here
It is already happening in 2 wheeler and 3 wheeler space.With subsidies, the cost of ownership of a 2 wheeler is almost at par, and even cheaper as compared to some popular ICE models. The bridging of upfront investment will further swing the buying decision in favour of EVs.
Even without subsidies, the total cost of operation, i.e, vehicle buying cost plus running and maintenance costs of 2 wheeler and 3 wheeler EVs are lower than that of an ICE vehicle .
In China, 80% of the 2W fleet is electrified. 2W comprise over 80% of the of the auto volumes in India. With low cost of ownership, comparable performance, and conducive charging options (2W could be charged at home at minimal cost), the runway is long.
In last 5 years, two-wheeler sales in India stand at around 18 million units per year. Now auto is a cyclical sector. So let’s consider a moderate 5% growth for the next 10 years. At this rate, we are looking at 29 million units per year by 2030.
Even if we consider electrification level at one third (33%), it comes to 10 million electric 2W per year. In 2021, the EV 2W sales was 600,000. It's a 17x jump. This implies an annual growth rate of 32% over next 10 years.
To know more about this disruptive opportunity and stocks to keep on your watchlist, watch my video here.
eqtm.in/Zr6z8
For more such investing insights, do subscribe to the YouTube channel on smallcap multibaggers.
eqtm.in/x5RNg

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More from @Equitymaster

Feb 22
The Nifty Financial Services Index, also known as the #FinNifty, is an index that tracks the performance of the financial services sector in India. @bbrijesh explains about the index in detail. Image
#FinNifty is an index that tracks the performance of the financial services sector in India, which includes #banks, #insurance companies, #housingfinance, and Non-Banking Financial Companies (NBFCs). #FinancialServicesSector #India
The financial services sector in India is one of the largest and most diverse in the world, and FinNifty provides a way to track the performance of this sector. #FinancialServicesSector #GrowthPotential
Read 9 tweets
Feb 9
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#Trend 1: Every Auto Company will be a Tech Company in the future. Did you know that electronic systems accounted for only 5% of a vehicle cost during the 1970s?But since then it jumped to 35% in 2010 as per Deloitte, it's expected to reach 50% of the cost by 2030.
Forget @Tesla. The Ford F-150 has 150 m lines of codes written in its software as per the IEEE blog...and this was back in 2016. I believe this is a big opportunity. Watch out for companies like @MapmyIndia , @tataelxsi , and @quickheal .
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Feb 1
What is Moving Average in Technical Analysis and why it is important to identify market trends? Our ace chartist @bbrijesh decodes the ways to implement Moving Averages. #TechnicalAnalysis
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There are 3 types of #MA. 1) Simple Moving Average #SMA. 2) Exponential Moving Average #EMA. 3) Weighted Moving Average #WMA. The #SMA and #EMA are the widely used moving averages.
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Jan 30
As per Richa Agarwal, editor of our smallcap recommendation service Hidden Treasure, a huge structural shift is unfolding in the Indian economy that could create significant wealth for companies in India, and for the investors in them. Here's more from Richa:
India is undergoing structural shift that could benefit many Indian companies across sectors. I’m referring to the shifting supply chains in the post-pandemic era. These shifts were always happening but at a much gradual place. They have picked up the pace for three key reasons.
First- During and post Covid, the global companies with over-reliance on one supplier, specifically China, saw their supply chains breaking, and their prospects dwindling. With this shake up, the corporates are consciously deciding to diversify and broaden outsourcing.
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To plot EWI, the stock price is just added and it is plotted on the chart. For Eg. I have taken 10 stocks - #Reliance #LT #TCS #Infy #BajFin #Dixon #DivisLab #Titan #RECLtd #BharatForg Check #chart attached
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Jan 22
Smallcaps have a reputation of being risky, unlike their bigger peers. However, Richa Agarwal, Editor of Hidden Treasure (Equitymaster's smallcap recommendation service) and her team, have broken this myth. #smallcapstocks
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Some reflections first…2022 was a challenging year with Russia Ukraine war, supply chain disruptions, inflationary pressures, tech meltdown, slowdown in global economies and locks downs in China. And the rough ride is not over.
Read 19 tweets

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