How Auto Parts Manufacturers Are Driving the EV Revolution

Arvind Goel,Vice Chairman, TATA AutoComp Systems in a recent interaction with Industry Outlook shared his views on how traditional auto parts manufacturers are addressing the challenge of shifting from producing internal combustion engine (ICE) components to EV-specific parts, requiring new technologies and expertise, the various strategies that auto parts manufacturers are using to secure raw materials and mitigate supply chain disruptions and more.

Traditional auto parts manufacturers face the challenge of shifting from producing internal combustion engine (ICE) components to EV-specific parts, requiring new technologies and expertise. How are manufacturers overcoming this transition?

IC engine suppliers need not be excessively worried about declining volumes unless their focus is exclusively on the two or three-wheeler segments. In India, IC engine volumes are anticipated to grow in the next 10 years, driven by the continued demand for heavy commercial vehicles as well as agricultural tractors, both of which will largely retain IC engines. While electrification is anticipated to reach around 25 percent by 2030, the overall market for IC engines will continue to expand even in the passenger car segment.

Globally, specifically in Europe, the transition to EVs is anticipated to augment at a much faster pace. As a result, European OEMs will face several challenges in sourcing IC engines owing to their historical focus on large-scale manufacturing rather than medium or small volumes. This creates a significant export opportunity for Indian IC engine suppliers, who are well-positioned to meet this demand. Those with strong product capabilities as well as manufacturing expertise in IC engines can leverage this growing global requirement.

To sustain growth, IC engine suppliers should focus on enhancing quality as well as efficiency while adopting a broader market perspective. While it is critical to invest into electric vehicle technologies for the future, dedicated IC engine suppliers can afford to wait for the market to mature further prior to making a complete transition.

The EV industry heavily depends on critical materials which are subject to supply chain constraints and geopolitical risks. What strategies are auto parts manufacturers using to secure raw materials and mitigate supply chain disruptions?

The Government of India's strong emphasis on Atma Nirbhar Bharat has led to the introduction of various Production-Linked Incentive (PLI) schemes, driving businesses toward localization. As a result, organizations across industries are striving to reduce reliance on imports. However, certain critical products will still be imported for quite a while — most notably, semiconductors. Despite ongoing efforts to develop semiconductor manufacturing capabilities in India, the process is long and complex. Meanwhile, strategic import planning will be crucial, ensuring procurement from reliable nations to mitigate potential risks.

It is vital to recognize that no single organization can manufacture a wide range of semiconductors. While India, led by initiatives from the Tata Group as well as other major industrial players, is making significant strides in this domain, imports will also remain necessary in the foreseeable future. Managing efficiently will be key to maintaining supply chain stability.

Another crucial factor is the recent discovery of lithium-ion reserves in our country. However, even after a geological survey confirms the presence of lithium, it takes 6-7 years to develop a functional mine.  Despite this, alternative sources of lithium exist in countries such as Canada, South America and Australia rendering viable options for securing supply chains.

Cost efficiency remains a significant consideration. While localizing production may come with a cost penalty, industries should find numerous ways for optimizing expenses. Moreover, ongoing research into battery chemistries could help mitigate these challenges as well as reduce reliance on lithium ion technology.  

A major concern moving forward is the availability of rare earth magnets that are crucial for several advanced technologies but are heavily dependent on imports. Although some of the rare earth deposits have been identified in India, it will take time for them to be commercially developed.  Meanwhile, companies are exploring alternatives which include induction motors, however, these come with efficiency trade-offs.

Producing high-performance batteries and power electronics requires significant investments in R&D. How are auto parts suppliers adapting to meet the growing demand for advanced battery technologies and power management systems?

Over the past three decades, India has not invested sufficiently in R&D, with national spending average between 5.5 percent and 7 percent of GDP. Of this, nearly 50 percent comes from the Government of India, highlighting the consistently low private sector contribution.  

As a result, many companies seeking advanced technologies today are acquiring them through technology licensing, joint ventures, and similar agreements. Given the rapid pace of innovation, companies cannot afford to wait another decade to develop indigenous technologies before catering to the Indian electric vehicle (EV) market. Instead, they are securing technology by investing capital. However, while technology acquisition provides a strong starting point, companies must also invest in R&D to further enhance and customize these technologies. Constantly relying on external sources is not sustainable in the long run. The approach many large industries are taking involves initial technology transfers, followed by in-house R&D efforts to advance these technologies using local expertise.

As a result, most of the companies seeking advanced technologies today are acquiring them through tehnology licensing, joint ventures, and similar agreements. Given the rapid pace of innovation, organizations cannot afford to wait for another decade for developing indigenous technologies before catering to the Indian electric vehicle market. Rather they are securing technology by investing capital.  

However, while technology acquisition renders a strong starting point, firms should also invest in R&D to further enhance and customize these technologies. Constantly relying on external sources is not sustainable in the long run. The approach many large industries are taking involves initial technology transfers, followed by in-house R&D efforts to advance these technologies using local expertise.

One of the key areas of focus in EV development is the use of lightweight materials to enhance vehicle range. However, manufacturers should  also ensure that these materials meet stringent safety and durability standards. A common misconception is that lightweight structures compromise strength, but modern materials and advanced engineering have dispelled the myth.

For instance, high-density and high-tensile steels offer significant weight reduction without sacrificing strength. Aluminum, widely used in the automotive industry, has already been successfully integrated into vehicle structures—some Jaguar Land Rover models feature full aluminum bodies. Additionally, composite materials are emerging as a strong and lightweight alternative, further improving structural performance.

Strength and safety remain non-negotiable in vehicle design, regardless of weight reduction efforts. Every EV must undergo homologation, crash testing, and compliance with safety norms. With advancements in lightweight materials and optimized design methodologies, manufacturers are not only maintaining but enhancing structural integrity, proving that lightweighting and strength can go hand in hand.