🚗 EV hype

Good morning. Apologies we had to take an unplanned hiatus this week gone, but we are back and better than before.

Happy Monday. Let’s get this bread.

- Ruchirr Sharma & Shatakshi Sharmaa

TABLE OF CONTENTS

• 🚗 EV hype

• 🤑 UPI continues to gain in popularity

• 🗞️ Bite-sized summaries

  • ⚡️ India’s quest for electronics

  • 🤖 OpenAI raises at new valuation

  • 💳️ boAt x Mastercard

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• India's stock market saw positive performance. Key sectors like IT, banking, and automotive performed well. Positive global cues and domestic economic data supported the market sentiment, with investors anticipating potential interest rate cuts.

🌍️ International

• Wall Street stocks rose, with the Dow achieving a record closing high, driven by strong U.S. economic data that boosted expectations for a modest Federal Reserve interest rate cut in September. Key gains were seen in Tesla, Amazon, and Marvell Technology, while Ulta Beauty's shares fell after a forecast trim.

ELECTRIC VEHICLES

🚗 EV hype

EVs are all the rage in India. 

According to the latest Bain reports, EVs make up around 4.4% of new vehicle sales in India, with two-wheelers accounting for 85-90% of those sales. 

The EV market is expected to grow substantially by 2030, with projections indicating over 40% market penetration. The two-wheeler and three-wheeler segments will drive much of this growth. 

Electric passenger vehicles are expected to reach 15% penetration by 2030, spurred by new models from major manufacturers.

However, before we celebrate these impressive projections, it’s important to note that several challenges could slow down this adoption

• Inadequate charging infrastructure is a major barrier, with India having about 200 EVs per charging point—much higher than in the US and China, which undermines consumer confidence. 

• Additionally, the higher costs of EVs (often 50% more than traditional vehicles) and concerns over range limitations deter buyers.

• Supply chain issues, particularly reliance on imported batteries (60-70% from China), further threaten supply stability and pricing.

But the most significant challenge? Taxes.

• Balbir Singh Dhillon, Head of Audi India, recently pointed out that while battery electric vehicles currently benefit from a reduced tax of about 5%, hybrid vehicles are subjected to a total tax incidence of 43%. 

• In comparison, CNG cars are taxed at 28%. 

Now, you are probably annoyed by these numbers if you fall into one of 2 categories: 

• Buyer of EVs: You don’t wanna be paying 43% GST on a vehicle…

• Audi CFO: Your bottom line is taking a big hit because no one is buying your EVs. (Who wants to pay all that GST?!)

So what’s the solution? Dhillon advocates for continued subsidies until EV sales reach a sustainable level and suggests that lowering GST could accelerate adoption.

• Currently, EVs account for just 3% of Audi's overall sales in India, but the company aims to increase this to 40-50% by 2030. 

• Audi plans to focus exclusively on petrol and electric models in the interim, ruling out hybrids for the Indian market. 

• Dhillon is confident that once luxury electric vehicle penetration reaches 50%, the market will become self-sustaining.

Overall: The luxury car segment in India has experienced sluggish growth, with high taxation contributing to a stagnant market. To curb this, Dhillon advocates for a standardized taxation structure to make luxury cars more appealing, especially as Indian consumers are aware of the lower prices abroad.

But there is a small silver lining: the domestic luxury car market grew by around 8% in the first half of the year. Audi anticipates strong sales, particularly during the festive season, which could push overall sales beyond 50,000 units for the year, surpassing last year's record of 48,500 units.

Read more: Economic Times

GLOBAL TRADE

🤑 UPI continues to gain in popularity

A recent PwC India report revealed a growing trajectory for digital payments in India, projecting a threefold growth by the fiscal year 2029. The Unified Payments Interface (UPI) continues to dominate, expected to account for 91% of digital payment volumes by FY29.

Here’s the TL;DR:

1. UPI transactions grew by 57% year-on-year, with volumes projected to reach 439 billion by FY29.

2. Credit cards surpassed the 100 million milestone, with 16 million new cards added in FY24.

3. Debit card usage declined as consumers shifted preferences.

4. Merchant-acquiring solutions saw over 25% growth, driven by regulatory push and QR code adoption.

The report identified several factors fuelling this growth:

• Innovation in payment modes and increased credit availability

• Rise in retail loans and SME financing 

• Regulatory guidelines simplifying cross-border payments

• Convergence of financial services in super-apps

• Big data analytics enhancing customer insights

However, challenges remain in data privacy, security, and talent acquisition for analytics roles.

The B2B payments sector is also undergoing significant transformation. Businesses are digitising accounts receivable and payable processes, while commercial cards are becoming essential tools for SMEs and MSMEs.

Looking ahead: The industry is well positioned for an era characterised by new product launches, technological advancements, and enhanced customer safety protocols. 

As the digital payments landscape evolves, collaboration between regulators, industry stakeholders, and consumers will be crucial to ensure transparency, security, and sustained growth.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

⚡️ India’s quest for electronics - India is preparing a $15B blueprint for the second phase of its semiconductor manufacturing incentive policy, following the near-exhaustion of its initial $10B outlay. The new scheme aims to attract more chip fabrication plants and could offer capital support for raw materials and gases used in chip manufacturing. However, it may reduce subsidies for assembly and testing plants from 50% to 30-40%. The government is also considering incentivising micro-LED display fabrication and may not support technology transfer costs. This move comes as India aspires to become a major chip hub, having already approved several significant projects including a $11B fabrication plant by Tata Electronics and Powerchip.

🤖 OpenAI raises at new valuation - Apple and Nvidia are reportedly in talks to invest in OpenAI's new funding round, potentially valuing the ChatGPT creator at over $100B. This round, led by Thrive Capital, aims to raise about $1B. Microsoft, OpenAI's largest backer, is also considering participation. The funding is crucial for OpenAI to cover its soaring operational costs, particularly for computing power. If successful, OpenAI will be one of the world's most valuable startups.

💳️ boAt x Mastercard - Mastercard and boAt have partnered to enable contactless payments on boAt smartwatches in India. Mastercard cardholders can now make secure transactions up to ₹5,000 using the Crest Pay app on their boAt devices. This feature uses Mastercard's device tokenization technology for enhanced security. The collaboration aims to capitalize on India's growing wearables market, which saw a 73.7% increase in smartwatch shipments in 2023, reaching nearly 54 million devices.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• Nokia to establish world’s largest fixed network testbed in Chennai.

• Only 6.7% of court infrastructure at the district level is female-friendly: CJI

• Rahul Gandhi to visit US on September 8; to meet Indian diaspora, lawmakers in Dallas and Washington DC.

• Ashwini Vaishnaw launches India’s first Vande Bharat Sleeper trainset.

• GST collections grow 10 per cent to ₹1.75 lakh crore in August.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• US Open 2024: Djokovic and Alcaraz have an early exit this year. All latest updates here.

• ‘Wolfs’ review: Brad Pitt and George Clooney reunite for a cunning caper.

• IC 814 The Kandahar Hijack review: Anubhav Sinha's presents an insanely gripping limited-series.

• Rehnaa Hai Terre Dil Mein re-release looks to be a box office success story.