Bajaj Auto, TVS Motor better placed among 2Ws in Delhi EV policy

Tata Motors and M&M could gain among passenger vehicle makers

The Delhi Cabinet has approved the Delhi Electric Vehicle (EV) Policy 2.0 with a combination of incentives, infrastructure development, and regulatory mandates. The policy aims for complete transition to electric three-wheelers (e3Ws) and two-wheelers (e2Ws) from January 2027 and April 2028, respectively, with staggered transition in other categories. Only e3Ws (L5 category) will be permitted for new registrations from January 2027 and only e2Ws from April 2028 in the National Capital Territory (NCT). L5 category refers to high-speed, heavy-duty commercial vehicles designed for carrying goods or passengers.

 

There are purchase incentives for e2Ws (maximum ex-factory cost at ₹2.3 lakh), e3Ws, and ePVs (passenger vehicles) to encourage adoption. ePVs and strong hybrid electric vehicles (ex-showroom prices at below ₹30 lakh) will receive 100 per cent and 50 per cent exemption, respectively, from road tax and registration fees until financial year 2029-30 (FY30).

 

School bus fleets must be at 30 per cent EV penetration by FY30 in NCT. All government fleet vehicles (buses and N1 trucks) must be EVs from the date the policy is notified, except for emergency, or specifically exempted vehicles. Fleet operators will not be allowed to add any new petrol or diesel vehicles, including light commercial vehicles (LCVs), light goods vehicles (LGVs), and 2Ws to their existing fleets from January 2027 onward. They may add BS-VI-compliant 2Ws until December 31, 2026.

 

The policy commits a planned investment of ₹15,000 crore over FY27-FY30, including ₹7,000 crore towards purchase incentives and ₹8,000 crore for charging infrastructure, tax benefits, and EV ecosystem development. Around 32,000 EV charging points are planned across NCT. An earlier target of new registrations being 25 per cent EV by 2024 was missed, but there is a new target of 95 per cent EV of all new registrations by March 2027. 

 

Apart from encouraging transition, this policy may encourage other states to adopt copycat policies. Ather may be a beneficiary, while Eicher (Royal Enfield) and Hero MotoCorp are vulnerable due to higher exposure to motorcycles. TVS and Bajaj Auto are more insulated, given higher export exposure and rapidly growing e2W and e3W portfolios. In ePVs, M&M and Tata Motors Passenger Vehicles (TMPV) are better placed.

 

The purchase incentive structure is designed to encourage early adoption: e2Ws (ex-factory cost of below ₹2.6 lakh) to receive ₹10,000/kWh (up to a maximum of ₹30,000) in FY27, declining to ₹6,600/kWh (up to maximum ₹20,000) in FY28, and ₹3,300/kWh (up to ₹10,000) in FY29. e3Ws (L5) will get ₹50,000 in FY27, ₹40,000 in FY28, and ₹30,000 in FY29. eCVs (N1) will receive ₹1 lakh in FY27, ₹75,000 in FY28, and ₹50,000 in FY29. The structure is designed to encourage early adoption.

 

All ePVs with an ex-showroom price up to ₹30 lakh will receive 100 per cent exemption from road tax and registration fees until FY30. However, ePVs with prices exceeding ₹30 lakh will not be eligible. Strong hybrid EVs will receive a 50 per cent exemption until FY30. The policy announcement comes with a scrapping benefit of ₹10,000, ₹25,000, and ₹50,000 for replacing a BS-IV or older 2W, 3W, and goods carrier, respectively, with EV. For PVs (ex-showroom price below ₹30 lakh), incentive is the highest at ₹1 lakh.

 

In e3Ws, Bajaj, M&M, and TVS hold over 75 per cent aggregated market share. EV penetration in Delhi’s 3W space is around 60 per cent in FY27 year-to-date (YTD), up from 50 per cent in FY26. EV penetration in Delhi’s 2W segment is up from 7 per cent in FY26 to 11 per cent in FY27 YTD. The EV penetration in PV has increased from 8 per cent in FY26 to 11 per cent in FY27 YTD. M&M estimates EVs account for 31 per cent of its PV sales in Delhi. TMPV has seen its EV mix in Delhi rise from 14 per cent in FY26 to 22 per cent in FY27 YTD. Both could gain. The incentives for eCVs and investments in charging infrastructure could be beneficial for TMCV (5.5 per cent EV mix in Delhi in FY27 YTD). Apart from accelerating EV adoption, the policy may be positive for original equipment manufacturers (OEMs) and ancillary companies with EV exposure. The policy may be positive for Sona Comstar, Motherson Sumi, and Uno Minda.

 

The policy will impact the gas players. It is directly negative for IGL's Delhi auto-CNG volumes, but PNG domestic and industrial segments are unaffected. MGL may face challenges if Maharashtra adopts a similar policy. For Gujarat Gas, auto-CNG is a small percentage of its portfolio. If replicated by other states, this policy would change the automobile ecosystem. However, EV capacity and charging capacity will be stretched if the policy is adopted widely without staggered timelines.

   

The writer is a New Delhi-based independent journalist