Auto Stocks Decline Up to 5% on Delhi Government's Draft Electric Vehicle Policy

Delhi Government's Draft Electric Vehicle Policy Boosts EV Manufacturers

The Delhi government's draft electric vehicle policy for 2026–2030 has sent auto stocks soaring, with a 5% increase on April 13. The policy aims to curb air pollution by promoting clean mobility in the city, including a 100% exemption on road tax and registration fees for electric cars priced up to Rs 30 lakh until March 2030. Strong hybrid vehicles in the same price bracket will receive a 50% concession.

The proposed framework is seen as more comprehensive and could act as a long-term demand driver for EV manufacturers such as Tata Motors and Mahindra & Mahindra. According to ICICI Direct, incentives for cars below Rs 30 lakh may boost mass adoption, while compulsory electrification across key segments could create a structurally large replacement cycle.

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However, the brokerage cautioned that a potential ban on the sale of fossil fuel-powered two-wheelers from 2028 could weigh on manufacturers such as Bajaj Auto and TVS Motor, though this may be partially offset by higher electric vehicle sales. Delhi accounted for 2.7% of domestic two-wheeler registrations and around 3% of total EV registrations in FY26, citing data from the Vaahan database.

The policy proposes 100% exemption from road tax and registration fees for all electric vehicles registered in Delhi during the policy period, subject to specified conditions. Electric cars with an ex-showroom price of up to Rs 30 lakh will be eligible for full exemption from road tax and registration fees till March 31, 2030, while strong hybrid electric vehicles in this category will get a 50% exemption.

Residents of Delhi will get up to Rs 1 lakh as scrapping incentive on purchasing a new electric car in exchange for scrapping their old BS-IV and below vehicles, under the draft EV policy released by the city government. The incentive will be applicable if the purchase is made within six months of issuance of the Certificate of Deposit (CoD) from an authorised scrapping facility.

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The sell-off in the market also weighed on investor sentiment towards auto stocks as peace talks between the US and Iran fell through over the weekend, leading to a surge in crude oil prices. Despite this, the Delhi government's draft electric vehicle policy is seen as a positive step towards promoting clean mobility in the city.