SUMMARY
The road to large scale EV manufacturing goes through focus on import substitution, localization and self-reliance over the next decade
India still needs a manufacturing, supply chain and infrastructure ecosystem for mass manufacturing of EVs
The push towards indigenizing EV technology will help bring down the cost of ownership and increase adoption of electric vehicles
The EV boom is already in progress and the transition to electric is inevitable for India. The electric vehicle industry is still at a nascent stage in the country and the next two-three years will see faster growth and more adoption. We are likely to see a rapid change in 2021 as forces converge to align public policy, industry investment, and consumer demand to move EVs supply towards an elusive inflection point.
While India has taken pragmatic steps to drive higher consumption of EVs, there is a need for a thriving manufacturing, supply chain and infrastructure ecosystem which currently deters the pace of mass adoption. When we speak of EV manufacturing, the industry demands a more focused approach towards R&D and localisation to create sustained growth. The EV market in India is likely to be an Rs 50,000-crore opportunity by 2025, having already registered a 20 percent year-on-year increase in sales in FY20 (e-rickshaws excluded) as per Society of Manufacturers of Electric Vehicles (SMEV).
The current Indian EV manufacturing ecosystem largely depends on imports for EV components. India is one of the leading markets for automobile consumption and enhancing the local manufacturing of EVs will reduce dependence on fossil fuel and trigger a global transition towards clean energy. However, the price disparity, absence of charging infrastructure and an EV ecosystem which allows easy manufacturing, sourcing and financing hinders the growth of EVs in India.
The road to large scale EV manufacturing goes through focus on import substitution, localization and self-reliance over the next decade or so. The push towards indigenizing EV technology will help bring down the cost of ownership and increase adoption of electric vehicles.
Need An Ecosystem Driven Approach
The industry demands a standalone and focused approach towards EVs and not as just another addition in their product portfolio. The idea is to set up grants and funds for research as well as establish centers of excellence for cultivating a strong manufacturing base.
EV manufacturers should focus on designing vehicles which are powerful and give experience like a conventional ICE vehicle. It is also important that vehicles’ performances do not get impacted with road conditions, temperature, or any other external forces. Start-ups today have become a powerhouse for EVs and playing a pivotal role in the evolving electric mobility space in India. Charging infrastructure and innovation with new technologies in manufacturing are the key opportunity with the emergence of new business models.
There is also a need for customer mobilization to promote large adoption of EVs. Large OEMs will have to become knowledge centers to promote the drive towards import substitution and indigenization and encouraging quality manufacturing. Pilots in commercial segments should be considered within each state to bring these concepts into life, which perhaps will help increase customer confidence and boost demand.
Localisation And Indigenous Battery Tech
Focus on local manufacturing of cells and indigenisation will help achieve some level of battery standardization. However, to enable localization of EVs, the focus needs to come back to fabrication units which will be key to support low-cost manufacturing of electronic components, batteries, and power electronics for EVs. Automakers now need to start devising new approaches and technologies and promote long-term R&D in all aspects of EV technologies, say for fuel-cells, new battery-chemistries (with higher specific energy and energy densities), battery materials and chemicals.
The focus for the Indian manufacturers should be on manufacturing indigenous battery packs where there is enormous potential for customization. India remains a distinct market and we need battery packs which suit the Indian conditions, work against extreme temperatures, and not degrade fast for better ROI for customers.
As EV battery prices are set to go below $ 100/KWh, there is a huge opportunity in the sector to localise EV components and rescale our capacities for electronics and digitization. An industry roadmap on local manufacturing across tier 1, 2 and 3 suppliers and ramping up R&D will help reduce imports. There is also a need for new synergies such as with the IT industry in the areas of power electronics. India must look at using the first mover advantage for producing all components for EVs, thus driving towards the path of being a global leader in EVs.
Strong Policy Support Required
The policy support for EVs in India has been encouraging and, at this juncture, the industry expects further reforms and incentives for indigenous manufacturing to help faster EV adoption. The latest incentives under the PLI scheme will spur lithium-ion cell manufacturing in India and the role of fabrication units will be crucial.
We expect the Government to introduce and incentivise measures that kick-start production of lithium-ion cells in India. The Government needs to emphasise on materials like lithium, manganese, nickel, cobalt, and graphite to help reduce costs, and help in indigenisation of battery packs. India may have to look at battery materials through recycling of used batteries and be the capital of “urban mining” of used batteries. A strong EV value chain is also crucial to build an ecosystem to manufacture EVs. Up scaling the small and medium scale traditional auto-ancillary companies with the focus on electrical and electronics, will play a major role in driving the EV supply and component chain forward.
It is also important that the Government ensures on- ground implementation of the new and existing schemes, in a way to support the growth of the industry. We need stringency around better monitoring and execution of the policy schemes. OEMs and governments need to implement in tandem for ease of sourcing, manufacturing, and financing in the EV value chain, so that there is more confidence among the buyers to purchase EVs.
Since EVs need electricity, renewable sources of electricity production, such as solar, need to evolve too in the long run for supporting the charging requirements.
As India strives to feature among one of the top three global automobile manufacturing hubs by 2026, e-mobility presents a massive opportunity. Aligned with growing environmental concerns, movement towards electrification will ensure energy security and curb pollution levels in the country. Electric mobility as a technology though is at a very nascent stage in India and the path to implementation has multiple challenges.
Making in India is the only way to solve and reduce the cost parity. Once the prices of EVs come at par with ICEs, it will automatically drive demand and boost adoption. The next few years will help drive a more collected view on how India’s electrification will move forward. OEMs and governments need to implement in tandem for ease of sourcing, manufacturing, and financing in the EV value chain, so that there is more confidence among the buyers to purchase EVs.
