There are only 3 Nifty car stock zooms this year. Will Tesla’s Indian entrance keep Motown red?

Indian auto inventory is under pressure, and the Nifty Auto index has dropped 7% in February so far, showing a similar decline on the 2025 YTD. While the Nifty Auto industry remained flat in January, it has been in a correction phase since October 2024, accounting for 21% of its value. Sluggish sales, slowing demand for urban consumers and contracted profit margins have fueled the economic downturn.

In addition, automakers are looking to perform moderately in the 2025-26 fiscal year, reflecting the current fiscal year trend. The weaker sales of small car (driven by affordability challenges, mitigating pent-up demand, and high foundation effects) have greatly impacted the industry’s growth trajectory.

In addition, external factors such as the Donald Trump Administration proposed a 25% tariff on imports of cars to the United States, and reports of Tesla’s potential entry into India further suppressed emotions. Tesla’s arrival may intensify competition in the electric vehicle (EV) market, thus undermining the expansion plans of local automakers.

Despite these headwinds, the Nifty Auto index has grown more than 4% over the past year, outperforming the benchmark Nifty, with only 1.5% growth over the same period.

Nifty Auto Voters: Winners and Losers

So far, only three of only 15 Nifty Auto Index components have managed to stay on active territory in 2025.

Maruti Suzuki was the highest gain, up nearly 14% in 2025-to-date (YTD), while Ashok Leyland and Eicher Motors increased by more than 1.5%.

Meanwhile, Apollo tires have become the biggest laggard in the industry during this period, down more than 26%, followed by Bosch, Samvardhana Motherson and Bharat Forge, and in 2025, YTD has spun off more than 20% in 2025.

MRF lost 19%, while Tata Motors, Exide and Hero Moto lost over 10%.

Experts take: Should you invest in car space?

As India’s automotive industry is in a challenging phase, marking sales speed and profit pressure, analysts are paying close attention to the evolving regulatory landscape and the potential impact of Tesla’s entry into the market.

Proposed EV policy could harm investment in domestic ice market

HSBC raised concerns about changes in the proposed EV policy in India, which may have the potential to import electric vehicles rather than locally manufactured internal combustion engine (ICE) vehicles. The report shows that the government is considering lowering import tariffs on electric vehicles, an initiative aimed at attracting Tesla follows discussions between Prime Minister Narendra Modi and U.S. Elon Musk.

HSBC noted that the proposed 15% import tax on electric vehicles is significantly lower than the 43-50% GST imposed on locally produced ICE passenger cars, which also imposes a 13% road tax. Although India currently imports only about 8,000 electric vehicles per year, brokers warn that such policy shifts could prevent long-term investment in the domestic ice market, which could impact the wider automotive industry.

Tesla is unlikely to undermine domestic leaders

According to brokers, CLSA and Nomura Tesla’s entry into India is unlikely to be local leaders, such as Maruti Suzuki or Tata Motors, but could benefit major suppliers such as Sona Comstar, Sansera Engineering and Motheron Sumi.

CLSA said the market excitement surrounding Tesla’s entry into India may have been exaggerated. And a child ₹The 2.5 million Tesla model could gain market share, and brokers would not foresee that the U.S. giants would seriously undermine domestic leaders like Maruti Suzuki, Hyundai Motors or Tata Motors. Instead, it expects Tesla’s presence to accelerate the Indian auto market.

CLSA also stressed that Tesla will require local manufacturing to expand effectively. Even if the import tariff is reduced to less than 20%, the model is ₹Without a domestic production base, it will be difficult to have 350,000-4 million.

Nomura responded to a similar view, saying that while Tesla’s entries could reshape the electric vehicle sector, mature players will continue to dominate, especially in the mid-market and budget sectors.

It believes that India’s growing EV policies will accelerate adoption of EV adoption, making it easier for global players like Tesla to invest in the country. Nomura added that policy changes are also expected to promote India’s EV infrastructure, benefiting major suppliers such as Sona Comstar, Sansera Engineering and Motherson Sumi.

Disclaimer: The views and suggestions presented above are those of individual analysts or brokerage firms, not mint. We recommend that investors contact certified experts before making any investment decisions.