Mahindra & Mahindra shares fall over 10% this week amid Tesla’s India entry 

Mahindra & Mahindra (M&M) shares have suffered a steep decline of ₹305.65 (-10.27%) this week, closing at ₹2,663.50 on February 21, Friday at 3:30 PM, as investor concerns over Tesla’s impending entry into the Indian market weigh on sentiment. The stock has been under persistent pressure amid fears that the global EV giant could disrupt the domestic automobile landscape, despite Mahindra’s confidence in its localized manufacturing edge.

Tesla has finalized showroom locations and is exploring land options for a manufacturing plant in India, intensifying competition fears for domestic automakers. While Mahindra has downplayed the impact, global brokerage CLSA has noted that the company’s valuation already factors in Tesla’s entry, adding that a sub-₹25 lakh Tesla model remains unlikely in the near term.

Adding to the pressure, the Society of Indian Automobile Manufacturers (SIAM) has revised its passenger vehicle (PV) sales growth forecast for FY26 to just 1-2%, down from 3-4% previously. The auto industry body cited affordability concerns, a slowdown in entry-level car sales, and fading post-pandemic demand as key reasons for the downward revision.

Nomura has echoed these concerns, forecasting a mere 1.5% PV sales growth in FY25, followed by 5% in FY26 and 6% in FY27. Market analysts also point to rising costs due to currency depreciation, which could make vehicles more expensive and further dampen demand in the mass segment.

As competition in the EV space heats up and global players like Tesla establish their presence, domestic auto stocks such as Mahindra & Mahindra could continue to see volatility in the near term.

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