In fact, since the Goods and Services Tax Council announced changes to the goods and services tax (GST) on the evening of 3 September, stock prices of two listed electric two-wheeler makers—Ather Energy and Ola Electric Mobility Ltd—have surged 39% and 42%, respectively. By contrast, shares of four leading internal combustion engine (ICE) two-wheeler companies—Bajaj Auto Ltd, TVS Motor Co. Ltd, Hero MotoCorp Ltd, and Eicher Motors Ltd—have risen 10.5-20% in the same period.
This is despite the fact that, under the revised GST structure, tax on electric vehicles (EVs) remained unchanged at 5% while that on ICE two-wheelers of up to 350cc was cut steeply from 28% to 18%, starting 22 September. It was widely expected that the reduced GST would lower ICE two-wheeler prices and spur demand.
“Clearly, the market is re-rating EV companies as it is confident that customers will increasingly choose battery powered vehicles as opposed to ones with petrol powered ones,” says Surjit Singh Arora, Head (equities) at Barclay PMS.
In FY24, electric two-wheeler sales touched 942,000 units, up 30% from the previous year. Electric two-wheelers are still a small share of overall two-wheeler sales of 18 million units in FY24.
Automobile stocks, especially two-wheeler makers, had already been rising in the fortnight leading up to the announcement, amid anticipation of the cut.
Since the introduction of GST in July 2017, the industry has complained that lower-powered two-wheelers were taxed at 28%, a rate meant for luxury goods, making motorcycles and scooters unaffordable. With ICE bikes under 350cc accounting for 77% of the nearly 10 million two-wheelers sold in the first five months of FY26, the lower tax rate just ahead of the festival season was seen as a demand booster.
ICE bikes get cheaper
The biggest ICE two-wheeler makers have now announced price cuts from 22 September, when the new GST regime takes effect. The largest two-wheeler maker Hero MotoCorp Ltd has cut prices by ₹7,000-14,000, while Eicher Motors Ltd, maker of Royal Enfield motorcycles, has cut prices on its top-selling 349cc models by ₹12,200–19,600.
“With the reduced prices, we can expect that sales growth to move up from the current 6-7% of the two wheeler segment to 9-10% this year,” says Arora.
Ordinarily, such price reductions would be expected to hurt EV demand: electric two-wheelers are inherently more expensive than ICE ones, and cheaper ICE options should make EVs appear relatively costlier.
But that hasn’t happened. Even as GST cut chatter swirled last month, the stocks of the two pure EV makers surged—driven by a sense that these shares had bottomed out after FY25 losses, according to analysts.
Ola Electric Mobility Ltd, which had hit a lifetime low of ₹40.8 in July, rallied to ₹70 early this month and now trades at ₹60, nearly 50% higher. During this period, the stock received an investment from marquee investor Samir Arora, who bought a 2.09% stake in the company through Helios Mutual Fund.
Ather Energy has climbed from ₹349 on 1 August to ₹569 now, on the back of a surge in trading volumes. The Helios Fund has also invested in Ather and in its promoter Hero MotoCorp Ltd, which owns 30% of Ather.
In an interview with CNBC TV18, explaining his investment in Ola Electric, Helios’ Arora said he expects the EV maker to eventually take share away from existing players in the market.
To be sure, both companies are still loss-making, having posted losses for the June-ended quarter as well as FY25. But Ather’s sales volumes have been growing much faster than the overall two-wheeler industry, while Ola Electric has cut costs over the past two quarters.
Ola, which recently celebrated manufacturing 1 million vehicles, has pared costs and has demonstrated corrective actions in response to customer complaints. The company is slated to roll out its first electric motorcycle early next month.
Ather’s sales volumes rose to 84,760 units in April-August from 48,136 a year ago. In August, Ola Electric regained the second spot in the EV space after clocking sales of 18,972 units. Though its August volumes were down 31% from a year ago, they were up 6% sequentially. TVS Motor is currently the No.1 player in EV two-wheeler sales, while Bajaj Auto Ltd is No. 3.
