Falling EV payback periods and rising fuel costs are pushing electric vehicles beyond the niche phase, prompting Nomura to favour automakers and suppliers positioned for faster adoption.
Nomura has turned more constructive on India’s auto sector as electric vehicle adoption gathers pace, naming Ather Energy, Mahindra & Mahindra and Hyundai Motor India among its preferred stocks, while also highlighting Sona Comstar as a supplier play. The brokerage said faster EV uptake, stronger product offerings and improving technology should increasingly shape returns for carmakers in the second half of FY27 and FY28.
The note comes as the EV transition in India appears to be moving beyond an early niche phase. Nomura said adoption has accelerated since the West Asia crisis pushed up fuel costs, with petrol, diesel and compressed natural gas prices rising sharply since December 2025. The firm added that a further increase of about Rs5-Rs7 per litre may be needed if crude stays near current levels, a move that would make battery-powered vehicles more attractive to buyers.
Nomura’s calculations suggest the economics are improving across segments. It estimated that the payback period for an electric scooter versus a petrol scooter has fallen to about 2.4 years, while the recovery period for an EV buyer could be roughly 8.8 years if resale value is ignored. In passenger cars, the break-even point versus petrol SUVs has shortened to around three years for compact SUVs, 2.5 years for mid-sized SUVs and two years for large SUVs. The brokerage said those numbers help explain why EV demand is rising fastest at higher price points.
The shift is already visible in the data. Nomura estimated that EV penetration in passenger vehicles rose to 7.9 per cent in September 2026 from 4 per cent in FY26, while two-wheeler penetration climbed to 11.6 per cent from 6.5 per cent over the same period. It said Delhi, Telangana and Odisha led passenger-vehicle adoption, while Odisha, Karnataka and Goa were among the front-runners in electric two-wheelers. In scooters, penetration reached about 25 per cent, and in the L5 three-wheeler segment it has moved from 5 per cent in FY23 to more than 50 per cent within four years.
Broader industry data also points to a stronger market. ICICI Direct said India’s EV registrations hit a record 3.06 lakh units in June 2026, with overall penetration crossing 12 per cent for the first time. Business Standard separately reported that the country has surpassed 10 million registered EVs, although public charging infrastructure remains relatively sparse. That backdrop helps explain why Nomura sees EV exposure becoming a more important stock-picking factor, with higher-content suppliers such as Sona Comstar and Exide Industries also likely to benefit over time. Exide, which commissioned its nickel manganese cobalt cell plant in September 2026, could see longer-term gains as battery localisation deepens.
Nomura also said India’s dependence on imported energy keeps electrification high on the policy agenda. India imports the bulk of its crude oil and gas, while non-fossil fuels already account for more than half of installed power capacity and about 29 per cent of power generation. The government wants non-fossil sources to provide half of power generation by 2030, a target the brokerage said should steadily improve the emissions profile of EVs and reinforce the case for the transition.
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