SBI Automotive Opportunities Fund: Tap Into India’s EV & Auto Growth Story

India’s automotive sector is undergoing a powerful shift that goes far beyond traditional vehicle sales. With the government pushing electric vehicle (EV) adoption, scrappage policy implementation, and supply chain localization, the country is on the verge of an auto revolution. As of FY2025, India has become the third-largest automobile market in the world, with EV sales crossing 1.6 million units in 2024 alone a 41% jump from the previous year. This growth is not limited to electric mobility; it extends to auto ancillaries, smart manufacturing, and next-gen mobility services.

For investors looking to ride this multi-year growth engine, the SBI Automotive Opportunities Fund offers a focused and strategic route. This thematic mutual fund is designed to give investors exposure to a curated basket of companies driving the future of mobility from legacy automakers and battery innovators to semiconductor suppliers and EV ecosystem players. Whether you're bullish on India's long-term auto demand or looking to capture the upside of mobility transformation, this fund brings the opportunity directly to your portfolio.

In this article, we’ll break down how the SBI Automotive Opportunities Fund works, what it holds, its performance so far, and whether it deserves a place in your investment strategy.

What Is the SBI Automotive Opportunities Fund?

The SBI Automotive Opportunities Fund is a thematic mutual fund that focuses exclusively on India’s rapidly evolving automotive and mobility sector. Launched by SBI Mutual Fund, one of India’s most reputable and largest asset management companies, the fund is designed to help investors capitalize on long-term growth trends in electric vehicles (EVs), auto manufacturing, and transportation technologies.

A Thematic Fund Targeting Auto Sector Growth

The SBI Automotive Opportunities Fund is a thematic equity mutual fund, which means it does not aim to diversify across unrelated sectors. Instead, it concentrates investments within a specific theme in this case, the automotive and mobility ecosystem, including both traditional automobile companies and players driving the next generation of clean, electric, and connected transport solutions.

Thematic funds are designed to help investors capitalize on long-term structural changes in the economy, and the Indian auto sector is undergoing one of the most transformative shifts in decades. This transformation is not cyclical it is structural and policy-driven, powered by new-age demand, government initiatives, and technological innovation. The SBI Automotive Opportunities Fund is thus uniquely positioned to ride this wave, offering targeted exposure to companies that are likely to benefit from this evolution.

India’s Auto Sector: A Strategic Growth Engine

India’s automotive sector is already one of the largest in the world contributing nearly 7.1% to the national GDP and 49% of manufacturing GDP, as per Invest India data. The country is also the world's fourth-largest car market and is on track to become the third-largest by volume in the next few years.

However, it’s not just about volumes. The qualitative transformation of mobility led by electrification, sustainability mandates, and digitalisation is unlocking value for investors. This includes the rise of electric two-wheelers, green public transport systems, and next-gen battery technologies. Thematic exposure through the SBI fund enables investors to participate in these granular shifts.

Backed by Policy and Incentives: Catalysts for Growth

The fund’s thematic thesis is further strengthened by a suite of aggressive policy interventions by the Government of India that are set to redefine the automotive landscape:

• FAME-II Scheme (Faster Adoption and Manufacturing of Electric Vehicles): With an outlay of ₹10,000 crore, FAME-II is incentivising demand for electric vehicles and promoting domestic manufacturing. Over 7 lakh electric vehicles have been subsidised under the scheme as of early 2025.
  
  
  

• PLI Scheme for Automobile and Auto Components: The Production Linked Incentive scheme has allocated ₹25,938 crore to promote advanced automotive technology and localise component manufacturing. This is expected to attract more than ₹42,500 crore in investment over five years, with a major push toward EVs and hydrogen fuel cell technologies.
  
  
  

• Vehicle Scrappage Policy: This initiative mandates phasing out old, polluting vehicles and replacing them with new, fuel-efficient or electric ones. This will directly benefit original equipment manufacturers (OEMs), auto ancillaries, and vehicle financiers.
  
  
  

These policies are expected to unlock multi-decade opportunities for growth in the sector, not only from a domestic consumption standpoint but also from an export and manufacturing competitiveness lens. Thematic mutual funds like SBI Automotive Opportunities Fund, by concentrating exposure in companies aligned with these trends, are well positioned to deliver alpha over time.

Focused Exposure with Built-in Sectoral Diversification

Though sector-specific, the fund doesn’t invest solely in car makers. Instead, it spans across the entire auto value chain, including:

• Traditional OEMs such as Tata Motors and M&M
  
  
  

• EV disruptors like Greaves Cotton or emerging battery tech firms
  
  
  

• Auto ancillary giants like Bosch and Motherson Sumi
  
  
  

• Tyre manufacturers, charging infrastructure providers, and logistics enablers
  
  
  

This ensures that while the theme remains focused, the portfolio isn’t overly concentrated in one type of company. Instead, it reflects the interconnected nature of the mobility value chain, providing diversified opportunities for growth within a high-conviction strategy.

Portfolio Composition: Beyond Just Cars

The SBI Automotive Opportunities Fund goes beyond conventional exposure to large-cap car manufacturers. Its strength lies in curating a diversified yet sector-specific portfolio that taps into the full spectrum of India's evolving mobility ecosystem. Instead of being narrowly focused on four-wheelers or ICE (internal combustion engine) manufacturers, the fund includes a strategic mix of stocks across the automotive value chain from original equipment manufacturers (OEMs) to EV enablers and component suppliers.

This layered approach ensures that the fund doesn’t merely track the cyclical fortunes of car sales, but instead captures structural tailwinds in the broader auto and mobility transformation. Let’s explore the major portfolio components in detail:

1. Original Equipment Manufacturers (OEMs): Backbone of the Industry

A significant portion of the fund is invested in OEMs, the companies that design and manufacture vehicles across categories from entry-level hatchbacks to commercial trucks and electric scooters. Top holdings often include stalwarts like:

• Maruti Suzuki: India’s largest passenger car maker, with a dominant ~42% market share. Its new focus on hybrid vehicles and strategic alliances with Toyota make it a long-term play.
  
  
  

• Tata Motors: A turnaround story backed by the success of the Nexon EV, robust commercial vehicle sales, and the rebound of Jaguar Land Rover (JLR) globally.
  
  
  

• Mahindra & Mahindra: A leader in SUVs and tractors, M&M also has strong exposure to rural demand cycles and a growing EV portfolio.
  
  
  

• Hero MotoCorp: The world’s largest two-wheeler manufacturer by volume, investing heavily in EV innovations via its Vida brand.
  
  
  

These companies are at the forefront of India’s transportation landscape and serve as growth proxies for domestic consumption and mobility infrastructure.

2. Auto Ancillaries: The Silent Growth Engines

Another crucial slice of the fund is allocated to auto ancillary companies, which produce essential parts such as brakes, wiring systems, gears, engines, and suspension components. Unlike OEMs, these companies often enjoy export-driven revenues, making them a hedge against domestic slowdowns.

Top names include:

• Motherson Sumi Wiring India: A global supplier of wiring harnesses and plastic modules, with a presence in over 40 countries and a diversified client base including Volkswagen, BMW, and Daimler.
  
  
  

• Bosch Ltd.: A global leader in mobility solutions and industrial technology, Bosch is a critical supplier for engine management systems and EV-compatible components.
  
  
  

• Bharat Forge: A precision engineering and forging giant, actively pivoting towards EV components, aerospace parts, and defense.
  
  
  

• Sundram Fasteners: Known for its strong balance sheet and leadership in high-tensile fasteners, it benefits from export-led growth in auto parts.
  
  
  

Together, these companies provide resilience and margin stability to the fund, especially during periods of muted vehicle sales when component demand remains strong through replacement cycles and exports.

3. EV Ecosystem: The Mobility of Tomorrow

With India’s EV adoption projected to grow at a CAGR of 49% between 2022 and 2030 (NITI Aayog), no automotive fund is complete without meaningful exposure to the electric vehicle ecosystem. The SBI Automotive Opportunities Fund identifies and invests in companies across this emerging vertical not only manufacturers but also battery producers, charging infrastructure players, and component innovators.

Key players include:

• Exide Industries and Amara Raja Energy & Mobility: Both are transitioning from lead-acid batteries to lithium-ion technology, partnering with global firms and setting up giga-factories to meet EV battery demand.
  
  
  

• Greaves Cotton: An early EV adopter through Ampere Electric, making affordable electric two-wheelers for India’s mass market.
  
  
  

• Tata Elxsi: Specializing in automotive software, autonomous mobility, and electric drivetrain simulation, catering to global automakers.
  
  
  

By investing in these future-ready businesses, the fund hedges against the long-term decline of ICE vehicles and ensures exposure to high-growth, next-generation transportation solutions.

4. Green Mobility Enablers: Infrastructure and Innovation

Beyond manufacturers and component suppliers, the fund also holds exposure to infrastructure and innovation-led businesses enabling India’s mobility shift. This includes companies focused on:

• Charging Infrastructure: Emerging players and conglomerates like Reliance Industries and Adani Total Gas are expanding EV charging networks across highways and cities.
  
  
  

• Hydrogen and Alternate Fuels: Companies involved in green hydrogen production, biofuels, or CNG infrastructure are gaining attention, particularly after the government’s push toward alternative fuels.
  
  
  

• Urban Logistics & Micro Mobility: Some holdings may indirectly play into the last-mile delivery boom (e.g., via e-commerce logistics providers using EV fleets).
  
  
  

This dimension adds a forward-looking tilt to the portfolio ensuring it’s not only rooted in current profitability but also aligned with India's 2030 clean mobility goals.

Why This Matters for Investors

Most sectoral or thematic funds tend to be cyclical, but the auto sector’s current transition is strategic, not seasonal. By structuring its portfolio across the entire value chain from legacy giants to EV disruptors the SBI Automotive Opportunities Fund offers a balanced and dynamic approach to investing in India’s auto growth story.

Moreover, this approach allows investors to capture multiple profit pools, consumption, exports, infrastructure, clean energy, and technology all through a single fund. The emphasis on quality, scalability, and diversification within the theme reduces idiosyncratic risk, making it suitable even for long-term SIPs.

Why the Auto Sector, and Why Now?

India’s automotive sector is undergoing a structural shift that is far more profound than a typical post-cyclical recovery. What we are witnessing is a once-in-a-generation transformation driven by policy reforms, changing consumer behavior, environmental considerations, and rapid technological advancements. For discerning investors, this presents a rare opportunity to participate in an industry poised for sustainable, long-term growth.

A Sector at the Intersection of Growth and Disruption

As of FY 2024, India has sold more than 1.6 million electric vehicles, a dramatic rise from just 325,000 units in FY2021, according to the Ministry of Road Transport and Highways. This exponential growth is not incidental; it is the direct result of a cohesive ecosystem of demand-side incentives, supply-side subsidies (like FAME-II), and an expanding charging infrastructure footprint across urban and semi-urban centers.

The government's ambitious target of 30% EV penetration by 2030 is backed by action not just intent. This includes production-linked incentives (PLIs) for battery manufacturing, tax rebates for EV buyers, and state-level policies offering road tax exemptions, which collectively make India one of the fastest-growing EV markets globally.

Global Sustainability Mandate Driving Local Innovation

The global push for carbon neutrality is forcing traditional automakers to pivot toward cleaner, greener solutions. Original Equipment Manufacturers (OEMs) are investing billions in hybrid drivetrains, lithium-ion battery platforms, and hydrogen fuel cell research. Indian players such as Tata Motors, Mahindra & Mahindra, and TVS Motor Company have already launched or announced several EV models across price points, reflecting a deep strategic shift.

Simultaneously, auto ancillaries are evolving from being mere component suppliers to technology partners developing power electronics, sensors, battery packs, and telematics solutions. This represents an entirely new revenue pool for companies that were once limited to exhaust pipes or crankshafts. Investors benefit not just from volume growth but also from value migration across the supply chain.

A Domestic Consumption Giant with Global Linkages

India is the world’s third-largest automobile market by volume, surpassing even Japan as of 2023. Yet, vehicle penetration remains among the lowest globally at only 22 cars per 1,000 people, compared to 800+ in the U.S. and over 150 in China. This underpenetrated, combined with rising disposable incomes, rural electrification, and urbanization, makes the Indian auto sector a multi-decade consumption story.

Moreover, several Indian companies like Motherson Sumi Wiring, Bharat Forge, and Sundram Fasteners generate over 30–60% of their revenue from exports, linking domestic auto exposure to global auto cycles and innovation-led demand. This dual engine domestic growth and global diversification enhances the risk-reward profile for investors.

Sectoral Funds: A Smart Gateway to Participate

Navigating this transformation as an individual investor isn’t easy. Stock selection requires an in-depth understanding of auto cycles, business models, and regulatory risks. That’s where thematic mutual funds like the SBI Automotive Opportunities Fund come in offering curated exposure to companies riding this wave, backed by institutional research, disciplined rebalancing, and professional fund management.

The fund includes:

• Leading OEMs like Maruti Suzuki and Tata Motors
  
  
  

• High-margin auto ancillaries like Bosch and Minda Industries
  
  
  

• EV ecosystem players like Exide Industries and Greaves Cotton
  
  
  

• Companies powering the EV infrastructure, such as Tata Power and Reliance
  
  
  

This diversified exposure helps mitigate concentration risk while ensuring investors don't miss out on the winners of tomorrow.

Managed by SBI Mutual Fund — A Trusted AMC

The fund is managed by SBI Mutual Fund, an AMC with over ₹8.5 lakh crore in assets under management (as of Q1 2025), known for its robust research framework and risk-managed approach to fund management. Their active management strategy means fund managers have the flexibility to identify and capitalize on emerging auto-related trends and rotate holdings based on market cycles and valuations.

Who Should Consider This Fund?

The SBI Automotive Opportunities Fund is best suited for:

• Investors with a medium to long-term horizon (at least 5–7 years)
  
  
  

• Those who believe in India’s long-term mobility transformation
  
  
  

• Individuals looking to diversify their core equity portfolio with a focused, high-growth theme
  
  
  

• Investors who are comfortable with higher volatility and concentration risks in exchange for potentially higher returns

Fund Snapshot: SBI Automotive Opportunities Fund at a Glance

The SBI Automotive Opportunities Fund is a sectoral/thematic equity mutual fund that invests primarily in companies involved in the automotive and allied sectors. The fund’s mandate includes Original Equipment Manufacturers (OEMs), auto ancillaries, electric vehicle (EV) innovators, and companies supplying batteries, charging infrastructure, and green mobility solutions.

• Category: Sectoral/Thematic Equity Fund
  
  
  

• Benchmark Index: Nifty Auto TRI
  
  
  

• Risk Profile: High (due to sectoral concentration and cyclical exposure)
  
  
  

• Ideal Investment Horizon: 5 years or more
  
  
  

• Fund Objective: To generate long-term capital appreciation by investing in equity and equity-related instruments of companies engaged in or expected to benefit from the growth and development of the auto and mobility ecosystem
  
  
  

Who Should Consider This Fund?
This fund is best suited for moderately to aggressively risk-tolerant investors who have a long-term view on India’s mobility transformation and wish to capitalize on growth in the automotive value chain. It's especially appealing to investors with high conviction in the EV adoption story, clean energy integration, and consumer demand rebound in India’s vehicle market.

Why This Fund Makes Sense Now

The timing of this fund’s thematic focus aligns closely with multiple macro and microeconomic tailwinds propelling the automotive sector forward. Here’s why allocating a portion of your portfolio to this fund could be a smart long-term bet:

1. Rise of Middle-Class Consumption

India is expected to become the world’s third-largest consumer economy by 2030, with the number of middle-income households rising from 447 million in 2020 to over 1 billion by 2047 (EY-FICCI Vision 2047 Report). As disposable incomes rise, aspirations for vehicle ownership follow — not only in metros but also in Tier II and Tier III cities. Passenger vehicle sales have already touched a record 4 million units in FY24, signaling a structural, not cyclical, recovery.

2. EV Revolution Is Gaining Traction

From less than 1% market share in FY2020 to over 6.6% in FY2024, EV penetration is accelerating, driven by consumer demand, better battery technology, and robust government support through FAME II subsidies. The SBI Automotive Opportunities Fund captures this transformation by investing not only in EV manufacturers like Tata Motors but also in battery suppliers, EV financing arms, and charging infrastructure players, all of which benefit from the broader EV ecosystem expansion.

3. Policy and Infrastructure Momentum

The central government has announced ambitious targets including 30% EV penetration by 2030 and incentives under the Production-Linked Incentive (PLI) scheme for auto and battery manufacturers. In parallel, state governments are rolling out EV policies that offer capital subsidies and reduced road taxes. With over 8,500 public EV charging stations operational in India (as per Ministry of Power data), infrastructure bottlenecks are gradually being addressed.

4. India as a Global Export Hub

India is increasingly becoming an export hub for compact and affordable vehicles, especially to Latin America, Africa, and parts of Southeast Asia. Companies like Bajaj Auto, TVS Motor, and Maruti Suzuki are reporting double-digit export growth even amid global uncertainty. Simultaneously, Indian ancillaries are supplying high-value components to global auto majors, with companies like Sundaram Fasteners and Motherson Sumi clocking 30%+ revenue from exports.

This global footprint combined with a strong domestic demand base makes the Indian auto sector resilient and globally integrated, a rare combination for sectoral investing.

Bottom Line:

The SBI Automotive Opportunities Fund is more than just a cyclical play. It offers a way to invest in India’s next decade of mobility innovation, where technology, policy, and consumer behavior are coalescing into a compelling growth story. For those who believe in structural tailwinds in EVs, supply chain transformation, and long-term consumption, this fund provides a focused and professionally managed route to capture that upside.

Risks to Be Aware Of

While the SBI Automotive Opportunities Fund offers exciting upside potential, investors must also be aware of the inherent risks associated with thematic and sectoral investing.

1. Sector Concentration Risk

This fund is concentrated entirely in the automotive and mobility ecosystem, which means its performance is heavily dependent on how this sector performs. If the auto industry faces headwinds such as regulatory changes, technological disruptions, or weak consumer demand the fund’s returns may underperform broader diversified funds. Unlike multi-cap or flexi-cap funds, there is little cushion from other sectors such as IT, banking, or FMCG during down cycles.

2. Global Supply Chain and Raw Material Volatility

Automotive and EV-related businesses rely heavily on commodities such as lithium, nickel, and cobalt much of which is imported. Global supply disruptions (as seen during the COVID-19 pandemic or the Russia-Ukraine conflict) can directly impact input costs, margins, and production timelines. For instance, in 2021–22, the global semiconductor shortage led to a significant drop in vehicle output across Indian OEMs. Funds like this are exposed to such external shocks.

3. Cyclical Nature of the Industry

The automotive sector is inherently cyclical. It performs strongly during periods of economic growth and consumer optimism, but tends to lag during downturns, rising interest rate cycles, or inflationary pressure. For example, auto sales in India declined nearly 18% YoY in FY20, primarily due to weak rural demand and NBFC liquidity concerns. Sector-specific funds are sensitive to such demand cycles and may exhibit greater volatility in returns.

As such, this fund is best approached as part of a satellite strategy to complement a diversified, stable core portfolio rather than being a standalone, dominant holding.

Conclusion: Drive Growth with Smart Allocation

The SBI Automotive Opportunities Fund is a bold and timely bet on India’s evolving mobility narrative from electric vehicles and smart transport to export-led component manufacturing. For investors who are optimistic about India's transition to clean energy, rising domestic consumption, and the strategic role of the auto industry in GDP growth, this fund presents a high-conviction thematic opportunity.

However, as with all thematic investments, the key lies in balance and strategic allocation. This fund is not ideal for short-term investors or those seeking stability, but it can meaningfully enhance overall returns if paired with broader multi-cap or large-cap funds in a well-diversified portfolio.