Opportunities for global technology and components suppliers in the Indian EV supply chain
While you are reading this article, a news has freshly come up; Mahindra Electric, one of the country’s largest manufacturer of EVs is looking for a partner who could join hands to expedite their EV plans. If we look at another news, published a few months back, Tata AutoComp, a leading manufacturer of automotive components, has signed a joint venture with Prestolite Electric eyeing at the EV powertrain technology and making it available to Indian market.
If you dig up in the current happenings in the Indian EV market, you will discover an plethora of such happenings. In short, Indian Electric Vehicles ecosystem is taking off and numerous players, from small start-ups to the giant conglomerates, are all trying to benefit from this rising tide.
In this article, we will take a look at the opportunities that await the global technology/components suppliers in the electric vehicles supply chain in India. Before you continue with this article, if you have not, we will recommend you going through our earlier article in this series which talks about the outlook of Electric Vehicles market in India. (link to the article)
To summarise the earlier article, here are a few highlights which clearly tell why Indian EV market is bound to grow exponentially :
1. As per the roadmap laid out by Niti Aayog, a government think tank, by 2030, all the two wheelers, three wheelers, four wheeler fleets and public transport buses will be electrified in phases
2. This aggressive plan will lead to India producing 20 million EVs in the next five to six years.
3. To cater to this kind of EV production, India will also require 2/5th of global EV batteries manufactured.
4. Strong push on charging infra development.
These projections are aggressive yet well supported by wholesome planning and right incentive schemes.
Demand for tech-solutions and components :
E-Mobility being a new greenfield industry in India, while the Vehicle OEMs and major Tier-1 suppliers like battery pack & chargers have already set up, there is a huge need for the other supply chain. We see big opportunity for global suppliers of the following :
• Electric Traction Motor
• Thermal management system
• Batter Management Systems
• Battery packs – critical components & innovations
• Onboard Charger
• Innovative Transmission
According to the road map provided by Niti Aayog, the requirement for these components will also go in millions so as to cater to the EV production. As it can be seen, not all of these solutions/components are available in India at a competitive price. While some solutions are available, they are not feature-rich and functional. Through our research and our interaction with industry experts, the biggest bottleneck in India’s journey towards EVs is the availability of technology solutions and components which are an indispensable part of the EV ecosystem. On the other hand, this bottleneck can actually prove to be a massive opportunity for the global technology and components suppliers.
As we saw right at the beginning of this article, most of the Indian EV manufacturers are working hard on finding a right partner who can provide them with suitable technology or are making strategic alliances with start-ups which have developed some promising technologies in the EV landscape.
Here are a few pointers which assert the need of presence of global high tech players in the Indian EV ecosystem:
1. Short timelines : While developing technology in-house is always an option, Indian EV market is catching up faster than expected. Because of this, EV manufacturers are more willing to adopt a tried, tested and proven solution rather than inventing something from the scratch. This will lead to excellent opportunities for global technology and components suppliers – small and large to make inroads in a huge and growing market.
2. Magic of ‘scale’ : As of now, compared with the conventional vehicle market, EV market is in its infancy. Because of this, even on a global level, the volumes are modest. In such a condition, working with a global supplier is beneficial as these suppliers cater to the global market, they can pass on some benefit of scale to their OEM customers. This point is extremely important especially when prices of electric Vehicles are significantly higher than their conventional counterparts.
3. Supply Chain diversification : Like any other country, Indian EV supply chain is considerably dependent on the suppliers based in China. Post COVID-19, almost all major manufacturers are looking to diversify their supply chain which will create ample of opportunities for global suppliers.
4. Unfolding ecosystem : The electric vehicles ecosystem is still evolving. For instance, even though the number of Electric Vehicles is going up, hardly any technology is available for environmentally friendly recycling of the batteries. One can easily imagine how much is the scope for tech suppliers in the segment. As the penetration of EVs increases, many such opportunities will surface up. Based on our data and inputs, we have identified quite a few segments where localisation of technology will need a long run. As per our research, These segments will prove to be perfect windows of opportunity for foreign tech and components suppliers. As per our research, tech solutions and components required for charging stations, charging Infra, cell manufacturing and battery recycling are toughest to be manufactured locally. This is where the largest opportunities for foreign suppliers are awaiting. Apart from these, providers of connectors, motors, motor controllers, cooling system, BMS, thermal management systems also have huge potential. For instance, let us consider Battery Management Systems. At present, local manufacturers are manufacturing BMS for two wheelers; but these solutions have very limited features and functional effectiveness. At present, there is hardly any proven indigenous solution available for car or bus battery management. Companies which can plug into these gaps will gain access to immediate market.
From the above discussion, one can safely conclude that India is going to be a playground for EV OEMs and suppliers to them. If you would like to get personalised insights into the Indian EV market opportunities, feel free to write to me at email@example.com