Kotak sees Chinese competition and slower EV uptake constraining India auto R&D in 2026
Kotak Institutional Equities expects Indian automotive OEMs to keep R&D spending under pressure through CY2026 and the next three to four quarters. Intensifying Chinese competition and slower EV adoption are pushing manufacturers to prioritise existing platforms, with new platform programmes deferred or cancelled.
What happened
Kotak Institutional Equities · Kotak expects Indian automotive OEM R&D spending to remain constrained in 2026 as Chinese competition intensifies and EV adoption
Key facts
- Calendar Year 2026
- next 3-4 quarters
Why this matters
Automotive companies should prioritize partnerships, technology licensing and targeted acquisitions that accelerate EV capabilities without committing to large new-platform R&D budgets.
What to watch
- Monthly EV penetration in passenger vehicles and two-wheelers, especially whether growth remains below OEM production plans.
- Discounting, dealer inventory days and retail finance subvention levels for EVs and feature-rich ICE models.
- Announcements of cancelled, deferred or consolidated vehicle platforms and capex/R&D guidance revisions.
- Chinese OEM market-entry progress, local manufacturing partnerships, import-policy changes and component sourcing arrangements.
- Battery-cell price declines, charging-station utilization, fleet procurement volumes and EV residual-value trends.
- Hybrid model launch cadence and order books as a potential substitute for pure-EV demand.
- Prioritize inventory turns, finance penetration and service retention over dependence on blockbuster new-model launches.
- Increase dealer focus on facelift campaigns, certified pre-owned vehicles, accessories and extended warranties to protect gross profit.
- OEMs are likely to concentrate EV spending on a few high-volume nameplates, hybrids and fleet applications rather than broad portfolio expansion.
- Tier-1 suppliers should diversify toward software, electronics, lightweighting, cost-down engineering and aftermarket channels while reducing reliance on unlaunched EV-platform contracts.
- Retail investors should distinguish OEMs with profitable legacy portfolios and high localization from companies valued primarily on near-term EV launch pipelines.