Maruti's New Technology Might Forever Alter the Electric Vehicle (EV) Market

Innovation can be exciting.

Entrepreneurs across the world harness groundbreaking technologies to address challenges, creating a ripple effect of improvement across the globe.

Yet, every wave of innovation brings its own set of challenges.

This cycle not only guarantees a continuous stream of problems to be solved but also fuels the fire for endless innovation.

A recent example is India's largest carmaker Maruti announcing big plans to launch air copters by 2025.

That's right... Maruti is aiming for the skies and plans to launch electric air copters soon, with its eyes set on global expansion.

A Visual of Air Copters

Maruti's Bold Move to Make Flying Cars

Earlier this week, Maruti, in collaboration with its parent company Suzuki, announced that it's venturing into the development of electric air copters.

The electric air copters, named SkyDrive, are expected to be launched at the 2025 Osaka Expo in Japan.

These air copters will be bigger than drones but smaller than traditional helicopters, capable of carrying at least three individuals including the pilot.

The company aims to introduce new mobility solutions, initially in Japan and the US, before expanding to India.

Why this is a Big Deal

These air copters distinguish from regular helicopters as they weigh only 1.4 tonnes, which is almost half the weight of the typical helicopter.

Because of its lighter weight, it can take off and land on building rooftops, which increases its flexibility in city settings.

This will bridge the gap between drones and helicopters.

There are several Indian players in the electric vehicle market but none of them have yet announced anything remotely related to an electric air copter.

With this venture, Maruti is not just eyeing sales but also making a big step towards the Make in India initiative.

Maruti is also considering local manufacturing of these air copters to reduce costs.

Note that the main aim of this initiative is to present more innovative transportation options. While these will be initially launched in the US and Japan, it's only a matter of time before the technology comes to India.

When it does, Maruti will clearly have an advantage to disrupt India's air taxi market.

Perfect Timing!

This announcement from Maruti could not have come at a better time as Indian auto companies are having their day in the sun.

In the past one month, the auto index has rallied more than 10%.

M&M, TVS Motor, Maruti, Tata Motors - all these auto majors have touched their yearly highs not long ago with sentiment looking more bullish than ever.

The street is expecting higher sales going forward as India's economy improves and as people consider higher expenditure on luxury.

Data from the federation of automobile dealers shows that auto sales have touched record levels in the past few months.

In the case of Maruti, it was only a matter of time before India's largest car manufacturer wakes up from the underperformed in recent years. The underperformance resulted in Tata Motors racing past Maruti in marketcap race for the first time in seven years.

At the peak of the Covid crash, Maruti Suzuki was nearly 6x more valued than Tata Motors.

Maruti Suzuki currently trades at a PE multiple that's considerably lower than its 10-year average.

Maruti is getting battle ready with 8 new launches being planned over the next 4 years and with most of it being in the red-hot SUV space.

All the above factors indicate that this is one stock that you can certainly keep an eye out for.

How Maruti Suzuki Share Price has Performed Recently

In the past five days, Maruti share price has gained 7%. In 2024 so far, the stock is up 12%.

Maruti Suzuki has a 52-week high of Rs 11,480 touched today and a 52-week low of Rs 8,127 touched on 20 March 2023.

Ever since the announcement of air copters, shares have seen an uptrend.

In the past one year, Maruti share price has gone up by 27%.

Here's a table comparing Maruti with its peers -

Comparative Analysis

Company	Maruti	M&M	Mercury Metals	Tata Motors
ROE (%)	14.1	22.1	5.4	5.2
ROCE (%)	17.7	14.9	4.4	7.5
Latest EPS (Rs)	386.9	89.7	0.1	58.4
TTM PE (x)	28.7	19.7	753.3	15.8
TTM Price to book (x)	4.3	3.5	20.3	5.1
Dividend yield (%)	0.8	0.9	0	0.2
Industry PE	24.6
Industry PB	3.9

Data Source: Ace Equity

In Conclusion...

It is important to evaluate this new product as an ever-evolving project. The pace and direction of improvement is much more important than the current static point in time.

That is a BIG idea for sure.

Historically, what happened was people lived their lives without worrying about technology.

That is changing now.

With AI picking up pace, people are realizing the fact that technology is a net positive in the world.

In case of Maruti, we don't know if it will work in India, but Maruti is certainly bringing a new solution to a new problem.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...