Bajaj Auto Plans Maharashtra Exit Over Unpaid EV Incentives

Bajaj Auto is exploring options to set up a new manufacturing plant for its Chetak electric scooter outside Maharashtra. This move comes amid disputes over incentives promised under the state's Electric Vehicle (EV) policy. The company states it has received only a fraction of the subsidies owed, with Managing Director Rajiv Bajaj expressing serious doubts that the state government will fulfill its financial commitments, totaling over ₹60 crore. This perceived policy failure is pushing Bajaj Auto to seek more stable regulatory environments for its growing EV business.

Maharashtra EV Policy Under Fire as Subsidies Lag

Maharashtra's electric vehicle policy is facing intense scrutiny. Bajaj Auto currently produces its electric scooters at its Akurdi plant in Pune. However, the state administration's alleged failure to honor agreed-upon EV policy terms has become a major concern. The issue affects more than just Bajaj Auto; around ₹3,000 crore in state EV subsidies remain unpaid since fiscal year 2021-22, impacting multiple manufacturers. This uncertainty is causing companies to reconsider long-term investments. Uttarakhand, with its EV Policy 2019 and a proposed 2025 framework, offers potential incentives for manufacturing. Southern states like Tamil Nadu and Telangana are also actively promoting EV manufacturing with significant capital subsidies and tax exemptions.

Competitors Expand While Bajaj Considers Exit

Bajaj Auto's potential move occurs as competitors are expanding. Ather Energy is investing heavily, planning a third plant in Aurangabad, Maharashtra, with up to ₹2,000 crore. This contrasts with Bajaj's decision to consider leaving over policy issues. Meanwhile, Ola Electric faces challenges including declining market share, reduced battery manufacturing targets, and penalties for missing government Production Linked Incentive (PLI) timelines. The Indian EV market is projected to exceed $101 billion by 2030, growing at a 38.8% CAGR. The market is rapidly expanding but also consolidating, with the top five players holding about 80% of the market.

Rajiv Bajaj Calls Policy a "Massive Failure"

Rajiv Bajaj has called the Maharashtra government's EV policy a "massive failure," a "policy failure" in his 36-year career. The estimated nearly ₹100 crore in unpaid subsidies for Bajaj Auto alone poses a significant financial risk and reduces investor confidence. This situation raises questions about the reliability of state-level EV incentives, which Bajaj argues can "slow innovation and cushion inefficiency." For a company with a market capitalization of approximately ₹2.62 trillion and a P/E ratio around 28-30, this policy instability impacts strategic planning and capital allocation. The payment delays affect pricing calculations and investment viability, potentially forcing manufacturers to absorb costs or find more predictable markets.

Bajaj Auto Targets June for New EV Plant Decision

Bajaj Auto plans to finalize the location of its new EV plant by June. Analysts hold a "Neutral" rating for Bajaj Auto, with a consensus 12-month price target around ₹10,183. The company aims to stabilize its electric two-wheeler output, targeting 40,000 units per month by April, and plans further product launches. This potential shift of EV manufacturing away from Maharashtra highlights the importance of regulatory stability and timely government policy execution for sustained growth in India's electric vehicle sector.