Investment in securities market are subject to market risks. Read all the related documents carefully before investing

India's Third Giant Leap
Discover the Best Category of Stocks to Ride
this Mega Opportunity On February 29

mailtimers.com


**Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
**By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.


AD

4 Reasons why India's Tesla Could be far More Profitable

Oct 20, 2021

The company is among the most profitable American auto makers. Its stock is up 800% since the start of the pandemic.

And it expects to launch a mix of premium offerings in the years ahead.

With electric vehicles gaining traction globally, its revenues will scale up. With its fixed costs being absorbed, its margins will also improve.

So, Tesla is one of the most popular electric vehicle stocks for good reason.

The company did flirt with bankruptcy in its initial years.

But later, with some tweaks in the business model, Tesla put its profitability woes firmly behind it.

Legacy auto makers in the US like GM and Ford have struggled to catch up with Tesla's technology and margins, which are double their own.

Yet, Tesla remains a capex heavy business.

--- Advertisement ---
Investment in securities market are subject to market risks. Read all the related documents carefully before investing

Today at 5pm
mailtimers.com
Today at 5pm our senior analyst - Rahul Shah - will reveal his big prediction at this online event.

You'll discover:

• How India's third giant leap could potentially generate wealth at a scale we've probably never seen before

• Best category of stocks to ride India's third giant leap

• A chance to get information on Rahul's top 3 stocks

Get Full Details Here
Details of our SEBI Research Analyst registration are mentioned on our website - www.equitymaster.com
---------------------------------------------------

It depends on steady supply of cheap resources for battery making. It relies on government subsidies for EV manufacturing. It must constantly launch new variants to sustain revenues.

So, it's extremely speculative to bet on Tesla's long-term profits.

For that matter, any direct play on the EV opportunity could go horribly wrong if the new launches fail.

It's like the gold rush, where a few gold miners actually find any real gold.

On the other hand, the businesses that flourish are ones either selling wares or offering services to the gold miners.

Let me put this in context with the India's EV market today.

Small Indian companies with unique business models, specific to the EV segment, are seeing exponential growth.

In fact, no matter which EV maker find success in new model launches, these niche businesses will see their profits soar.

--- Advertisement ---
Investment in securities market are subject to market risks. Read all the related documents carefully before investing

This Silvery-white Metal is a Potential Fortune Maker

This silvery-white metal goes inside almost all the electronic gadgets that you use: mobile phone, laptop, Bluetooth speakers.

Not only that... this metal also goes inside equipment used by large data centres, telecom towers, railways, planes, EVs.

We're talking about Lithium. Lithium is the new oil.

Our research has found the best way to tap into this rising demand of lithium in India.

You can click here to get full details
Details of our SEBI Research Analyst registration are mentioned on our website - www.equitymaster.com
---------------------------------------------

Here's an example...

Under the vehicle subscription model, a vehicle is sold on a monthly rental basis without any upfront cost.

This business model aims to reduce up-front costs for customers. The service provider offers maintenance and insurance plans along with the vehicle.

In addition, battery-related issues are covered by the subscription partner. At the end of tenure, customers have an option to retain the vehicle after paying a pre-decided amount.

There are many more profitable business models like this. Here's another...

Batteries are one of the most expensive components of an EV. It's the main reason for the huge price between the price of an electric and internal combustion vehicle.

Under the battery subscription model, the vehicle is sold without batteries. The batteries are then sold separately on monthly subscription. This business model aims to address concerns on upfront cost differentials and the reliability of the battery.

Here's another example...

Charging as-a-service (CaaS) creates a charging network to address customers' range anxiety. The charging infrastructure provider offers an option to charge the vehicle on a subscription or pay-per use basis.

Then there's a battery swapping model. This is an extension of the battery subscription model.

--- Advertisement ---
Investment in securities market are subject to market risks. Read all the related documents carefully before investing

Want to Grow Your Wealth With Safe Stocks?

Access Our Premium 'Low Risk, High Return Potential' Stock Research at Rs 2,050 Off

Full Details Here
Details of our SEBI Research Analyst registration are mentioned on our website - www.equitymaster.com
---------------------------------------------------

Here, the customer has an option to swap the drained battery with a charged battery for a fixed fee. This model primarily addresses concerns on battery charging time and reliability.

Such asset light business models are far less risky compared to mainstream EV makers.

They have much higher potential to sustain high margins compared to even the largest and most profitable EV producers.

And they're likely to create a moat much wider than any mainstream EV maker due to network effects.

I believe India's Tesla would be a company that is an indirect play on the massive EV opportunity.

This is why it could be far more profitable over the longer term.

My research on the EV ecosystem threw up several such hidden opportunities which are being completely ignored.

As I write this, I am also putting the final touches to my special report on 3 EV stocks.

To know more about these profitable investing opportunities, join me at my special online event on 25 October.

Please don't invest a single rupee in EV stocks before attending the event!

Book your free seat here.

Warm regards,

Tanushree Banerjee
Tanushree Banerjee
Editor, StockSelect
Equitymaster Agora Research Private Limited (Research Analyst)

PS: Equitymaster's secret research has uncovered a little-known way to play the massive 15x Profit opportunity in EVs. Get the details here...

Recent Articles

Can Competition Kill Asian Paints? February 28, 2024
Should the current rough patch be considered permanent damage for Asian Paints? Find out...
How Smallcaps are Riding India's Tech Boom February 27, 2024
Some Indian smallcaps are facing tech disruption head on.
Can Coal India Crash to Rs 300 Per Share? February 26, 2024
What is the way forward for Coal India after the run up in price?
Lesser Known Smallcaps with Big Potential February 23, 2024
Caution, and not greed should be the sentiment while investing in smallcaps in the ongoing rally.

Equitymaster requests your view! Post a comment on "4 Reasons why India's Tesla Could be far More Profitable". Click here!