To support India’s journey to electrification, auto component makers will make investments of Rs 25,000 crore in 3-4 years to make components for the electric vehicle industry.
This capital expenditure will be used for capacity building, technology and product enhancements, research and rating agency ICRA said on Tuesday. About 45-50% of this, would be towards battery cells.
“The PLI (production linked Incentive) scheme, recent e-vehicle policy and state incentives would also contribute to accelerating capex. The larger projects (especially for battery cell localisation) are expected to be funded partly by debt initially,” Shamsher Dewan, Senior Vice President and Group Head – Corporate Ratings, ICRA said.
At present, only around 30-40% of the EV supply chain is localised. Battery cells largely remain imported. Typically, battery packs are the single most expensive item in an EV, making up around 40% of the cost of the vehicle.
Chassis components that require minimal technology upgradation are manufactured locally. There has been substantial localisation in traction motors, control units, and battery management systems over the years.
“To achieve mass-scale penetration of EVs and a competitive cost structure, India will need to create its own eco-system for developing battery cells locally. In ICRA’s view, the demand for EV battery in India (for domestic sales alone) is expected to reach ~15 GWh by 2025 and ~60 GWh by 2030,” Dewan said.
Tata Sons and Suzuki are setting up EV battery cells making plants in Gujarat. Exide Industries will setting up a plant in Karnataka while JSW Group chose Odisha for an EV battery plant.
ICRA expects EVs to account for around 25% of domestic two-wheeler sales and 15% of passenger vehicle sales by 2030.
Accordingly, the rating agency projects the Indian e-2W component market potential to exceed Rs 100,000 crore by 2030, while the e-passenger vehicle (e-PV) component is foreseen at another Rs 50,000 crore at least, in terms of revenue potential for ancillaries.
