Financial Services organised its first Electric Vehicle conference which
featured 700 eminent speakers and stakeholders from the EV value chain. The
conference noted that the expectation of EV adoption is high, and the debate
has now shifted from ‘when’ to ‘how fast’. Across the value-chain, the moves of
firms on the product line-up, investment fronts and their resolve to go ‘all
electric’ has reset the expectations about the pace of EV adoption.
Some of the key
takeaways from the conference are:
new products expected to drive adoption
Global OEMs are
introducing their models either directly (Mercedes Benz) or through
collaborations (GreenPower). Most of the domestic OEMs and start-ups (Ather)
are also indigenously developing and launching products. These launches will
drive the evolution from ‘early adopters’ and ‘technophile purchasers’ to ‘mass
Apart from the
shift in customer preference from ICE to EV for private use, there is a shift
expected in the commercial and shared mobility space (Yulu) due to superior
cost economics. EV penetration should be
sooner in 2Ws and 3Ws, while adoption may be gradual in PVs. Emkay Global
expects an increase in competition and margin pressures for incumbents in 2Ws
and 3Ws over the next 2-3 years.
policies are in the right direction
is expected to be driven by stringent emission norms, incentive schemes,
well-defined long-term policies, standardisation of charging infrastructure and
a structured approach to reduce dependency on imports. FAME-2, PLI and state
government EV policies are expected to promote EV demand, improve localisation,
increase cost competitiveness and develop a complete ecosystem.
manufacturing capacities are expected to happen shortly
cost stands at 40-50% of raw material cost. Localisation is necessary to
achieve cost competitiveness. The government’s PLI scheme for Advanced
Chemistry Cells with incentives will encourage investments. As EV demand
improves, capacities would be commissioned, through investments from OEMs,
international ancillaries, domestic ancillaries and start-ups either on their
own or through consortiums.
Due to economies
of scale and technological advancements, battery costs are expected to
decrease. Battery swapping technology can support EV adoption and could be
successful for 2Ws and 3Ws. Lead-acid batteries are being used for SLI
(Starting, Lighting and Ignition) functions in EVs, but they will be replaced
by Li-ion batteries. This will pose a structural risk for companies such as
Exide Industries and Amara Raja Batteries.
suppliers are gradually adapting to EV transition
They do it
through indigenous product development or global tie-ups (Minda Corp, Napino
and Tata AutoComp) as components need to be localised under a phased
manufacturing program. FAME-2 incentives are being provided to OEMs, only if
required localisation levels are achieved.
The PLI scheme
for components with incentives should encourage further investments. Based on
global experience, only a few existing ancillaries and start-ups that focus on
EV components are likely are to benefit, while others lose out. This will pose
a structural risk for companies dependent on ICE engine/ transmission
infrastructure is being expanded notably
companies (Tata Power) and start-ups (Volttic and Sunergize) in highways,
tourist locations, hotels, offices, malls, parking areas, dealerships,
residential societies, etc., help for this. Similar to global experience, it’s
expected that over 70% of the charging needs would be met by home charging.
positive view on the Automobile sector is underpinned by expectations
of a strong cyclical upturn, which is expected to last at least three years.
The top picks among OEMs are Tata Motors, Ashok Leyland, Maruti Suzuki and
Eicher Motors. Domestic CV, PV and Premium 2W companies are not expected to be
impacted by EV transition over the next two years.
Source – Emkay Global Press Release
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