Auto-parts makers to see surge in EV orders as electric era beckons

Though the Indian electric vehicles market is still in a nascent stage, auto component makers here are seeing a gradual increase in orders for EV parts, signalling the impending vehicle technology transition in the near future.

Despite challenges and recent disruptions due to Covid-19, two and three-wheeler segments in India have been witnessing quick adoption of electric vehicles due to price parity and other cost benefits.

While there have been strong policy initiatives and budget allocation for public charging infrastructure, the supply chain industry has also been catching up fast in the recent months with auto parts players investing in electric vehicle R&D and other production-related infrastructure.

As a result, companies’ orders for electric vehicle parts supply have started to surge. Leading auto parts player Motherson Sumi Systems has an order worth of €15.6 billion, of which about 25 per cent is contributed by EV programmes.

Motherson’s EV orders are new orders, and supply is expected to commence within two years. Also, the EV order book includes only pure EV programmes and not electric versions of multi powertrain vehicles.

More opportunities

Sundram Fasteners has been supplying almost all parts, except batteries, to leading EV players. It is also looking at opportunities in battery or battery parts. Though its EV business is less than ₹100 crore now, it is hopeful of bagging more orders in the coming months.

“New opportunities would emerge in EV parts such as battery cells, battery pack, motor, controller and associated electronic components,” says Shamsher Dewan, Vice-President & Group Head, ICRA.

At present, requirements of battery cells, components, BMS (battery management system), etc for the electric vehicle makers in India are being met through imports.

Minda Corporation now has two separate divisions dedicated to EV in the form of EME division (Electronic Manufacturing Excellence) and Spark Minda Green Mobility Company. It focuses more on power electronics. For BMS, Minda is in final talks for collaboration with major start-ups. This is expected to pave the way for more orders in the EV segment.

Meanwhile, the Centre’s Production Linked Incentive (PLI) scheme to promote battery storage is expected to attract more investments in the EV supply chain segment.

As battery occupies a larger portion of EV's cost, setting up of battery manufacturing operations in the country will lead to the reduction of cost on purchase of electric vehicles. Companies like Amara Raja Batteries await detailed guidelines from the government as it is keen on investing in advanced chemistry cell batteries.

Though the Indian EV market is evolving, electric mobility in many global markets remained strong even during the Covid-19 crisis.

EV market

A McKinsey report said the electrification of powertrains leads to shifting demand for components and, consequently, a change in the machine tools required to manufacture these components. The transmission is the most impacted part of the powertrain.

Global new-car sales of electric vehicles (EVs), mainly battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), are expected to increase from 3.5 per cent of the global passenger vehicle sales share in 2020 (as of Q2 2020) to 39 per cent in 2030 due to regulatory pressures and changing customer demand, it said.

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