Original Equipment Manufacturers (OEM) focus in India on expanding their electric vehicle footprint is reflected in 80 per cent of their capex over the next three years, mentioned credit rating agency India Ratings and Research.
Ind-Ra stated that it does not expect a material change in the credit profiles of established internal combustion engine (ICE)-focused OEMs given their low leverage.
“The median net leverage was 0.2x and median CFO/capex ratio was 2.13x during 1HFY25 for listed auto OEMs on a standalone basis. New players backed with equity capital and traction, however, will need to establish a viable business model towards cash flow generation” stated Ind-Ra.
Further, the agency stated that the actual execution on the ground will be contingent on demand growth and may need support from subsidies and the development of adequate charging infrastructure.
“Two-wheelers EVs registered sales of over 1.05 million during the first 10 months of 2025, but the impact of profitability on account of the reduced subsidy at INR5,000/kWh and increasing competition needs to be assessed,” added Ind-Ra.