Why EV Component Manufacturing is yet to Catch Up in India

Lack of scale

At present, owing to the small size of the EV industry and shortage of mass manufacturing of EVs, most enterprises import components from other countries. The Electric Vehicles market in our country makes up only one percent of the total sales of the auto sector.

“The ecosystem in India for (the manufacture of) electric vehicles is not so robust, and therefore you have quite a few components being imported, like parts of the drivetrain, battery, battery components, etc,” Automotive Component Manufacturers Association (ACMA) of India Director-General Vinnie Mehta told Moneycontrol.

He further added that since there are no mass manufacturers of EVs in the country currently, and even conventional parts which could be manufactured locally are being imported owing to the lack of economies of scale.

He stated that at present, around seventy percent of components that are used in the manufacturing of EVs are imported from countries such as Taiwan and others. Nevertheless, Mehta stated that as the volumes of Electric Vehicles increase, the local component sector will become capable of supplying indigenous parts.

“Electrification can only happen at a large scale in India when the customer finds it is in his interest to buy an electric vehicle rather than an internal combustion engine,” Chairman of Maruti Suzuki India R C Bhargava said last week. “Given the state of infrastructure in various areas, this process will take some time and the internal combustion engine vehicle will continue to be in production for many, many years,” Bhargava said.

India’s EV market may be small but it has huge growth potential. Ravneet Phokela, Chief Business Office at Ather Energy, one of the biggest electric two-wheeler makers in India, said that “the government has addressed quite a few concerns of the EV industry in India. The only thing we import from China is cells because India has no cell production.”

Obstacles in localization

One of the biggest obstacles for the Indian Electric Vehicles sector is the country’s dependence on China for batteries/Advanced Chemistry Cell batteries since India has no cell manufacturing.

Therefore, solving these aforementioned challenges will need a stronger government push and policies that would further motivate the widespread growth of the Electric Vehicles industry.

Although the government is driving local automakers to shift to Electric Vehicles, the shift is occurring slowly than that is happening in other countries. Also, a few of the Indian legacy automakers are not very confident in switching owing to minimal charging infrastructure and the high price of electric models.

Pholeka said that while the Indian Government’s Rupees Eighteen thousand and hundred crore PLI scheme for manufacturing of advanced chemistry cell batteries might not have an impact, immediately on the Electric Vehicles ecosystem in the country, he anticipates that battery manufacturers to establish shop in India over the next five years.