EV adoption still far off in India, says Bernstein’s Garre; FMCG outlook turns neutral

Venugopal Garre, India Head of Research at Bernstein, remains cautious about the electrification of four-wheelers in India, citing multiple roadblocks that continue to hold the sector back.According to Garre, the lack of robust charging infrastructure remains a major challenge. “Until charging facilities improve meaningfully, it’s difficult to expect wider consumer adoption,” he said. He also pointed out that most electric vehicle (EV) launches, including those by Indian automakers, are happening at premium price points, which doesn’t help push adoption either.

Garre dismissed any strong link between the recent dip in Mahindra & Mahindra’s stock price and Tesla’s India plans, noting that broader concerns around weak auto sector margins ahead of the results season are a more likely reason.

He added that global supply concerns, like delays in rare earth elements and overall vehicle production, could also pressure Indian automakers in the near term.Reflecting on the global EV landscape, Garre noted that China significantly benefited from Tesla’s entry—not just in manufacturing, but also in building local talent and capabilities. He believes India would similarly benefit if companies like Tesla choose to invest locally. However, he cautioned that there’s no clarity yet on whether Tesla will build a plant in India.

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Garre, who had been underweight on consumer staples and consumption-related sectors for a long time, recently moved to a ‘neutral’ stance. He explained that while the sector remains expensive, several factors pushed him to change his view for the short term.“There’s been a noticeable improvement in rural demand data since November, the monsoon has been decent, and recent tax cuts could aid consumption. All these together support a mildly positive outlook,” he explained.

Garre clarified that while there have been stock price rallies driven by management changes or early earnings updates, these aren’t the main reasons behind his shift. Instead, the broader data points offer short-term support.

However, he remains cautious over the medium term. “We’re likely to see major disruptions in distribution, especially for large FMCG players. This will lead to a bigger pool of competing brands, which makes it hard to stay structurally positive on incumbents.”

He does expect volume growth to recover from last year’s weak base, and believes that this could help generate short-term returns. But he warned investors not to get carried away: “This is not the start of a long re-rating cycle. There will be challenges after a year or so. Let the rally play out, but don’t forget to book profits along the way.”

For full interview, watch accompanying video

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