Industry experts have a notion that the most obvious industry that will be impacted by the rise of EVs is the Internal Combustion Engine (ICE)-powered conventional auto industry. The conventional auto industry is already showing signs of pressure to adapt to this change and the market is seeing some definite shifts taking place. Consumer mindsets have also drifted towards sustainable mobility.
Some auto majors have stated their intentions to stop investing in new ICE platforms & models and many more have already announced deadlines to end ICE vehicle production.
Apart from the conventional automobile industry, the auto parts industry is another sector that will be affected by the emergence of EVs. This is because conventional vehicles and EVs employ different parts. As the EV market grows, we will see a significant shift in the types of auto parts manufactured, with EV-specific parts given equal or more importance. Manufacturing of components used in ICE vehicles such as conventional transmissions, engines & fuel-injection mechanisms would see a notable decline.
In the coming years, Internal Combustion Engines will be replaced by batteries & motors that power EVs. This will considerably impact the industry suppliers, compelling them to rethink their complete portfolio.
Nearly 100 traditional ICE components/parts will be eliminated in this switch to EVs and only a few will survive the change. EVs require 41 different components. The large auto parts suppliers are likely to adapt to the major changes, however the smaller players may feel the heat due to this upheaval.
Indian auto parts company Sona Comstar aims to double the revenue share of its global electric vehicle business by 2025. The company considers the emergence of EVs as ‘an opportunity to think differently and modify strategies to align with the new paradigm of e-mobility’. At present, Sona Comstar has an order book of Rs 20,500 crore, out of which 68% is in the EV segment.
Governments of many countries have offered attractive financial incentives to make people adopt EVs, such as providing cash subsidies to consumers, reducing taxes on EVs & increasing taxes on conventional vehicles.
Achieving price parity with ICE vehicles will play a big role in accelerating EV adoption.
According to a report by Deloitte, the conventional vehicle market will show growth till 2025 and afterwards it will experience a decline in market penetration. Countries that are unable to invest in electric vehicle charging stations, may see the market for ICE vehicles to remain strong for a longer duration.
The Indian Scenario:
In October 2021, Government of India set a target of electrifying 30% of all vehicles by 2030.
As far as number of models is concerned, the number of petrol & diesel-run models sold in the Indian market has reduced 20%, from 168 in 2018 to 136 in 2022.
In the past, EVs were seen as costly vehicles, but that perception is gradually changing. Many automobile manufacturers in India are launching EVs at prices that are competitive with conventional vehicles. Many companies are investing in EV charging networks, battery swapping stations, batteries for EVs, apps for charging electric vehicles, etc.
Scan the barcode and download the EVJoints app to find 6,000 EV charging stations across various networks.
Click & download the EVJoints app to find 6,000 charging stations.
The Global Scenario:
Toyota is adopting a ‘hybrid-first’ approach, with a belief that vehicles like its top-selling hybrid car ‘Prius’ have a significant short-term role to play in reducing carbon emissions. The company has positioned its luxury brand ‘Lexus’ as an EV-only brand with plans for full electrification by 2035.
General Motors too plans to exclusively manufacture electric cars by 2035. The company designated its 2035 EV goal as an ‘aspiration’. GM states that government regulations and EV charging infrastructure need to come together for the ‘EV-only’ plan to be achieved.
Can the two industries co-exist?
A strategic transition plan can create an opportunity for ICE-powered and electric vehicles to co-exist. India’s EV transition is a chance to reskill & reorient an industry that is a major contributor to the country’s GDP. India’s auto majors like Hero, Mahindra, Tata, TVS & Bajaj have already taken the leap of faith to go electric. Hero MotoCorp & Bajaj have created separate entities for their electric offerings.
The Surprise Factor: Electric Three-Wheelers!
Propelled by rising demands from e-commerce players & intra-city logistics companies, sales of electric three-wheelers have overtaken conventional three-wheelers. The share of electric 3Ws has shown rapid growth in India’s three-wheeler space in the past 3 years. From 20% in 2020, it jumped to 34% in 2021 and then to 46% in 2022. The government is targeting 80% EV penetration for electric three-wheelers by 2030.
Conclusion:
The next 5 to 10 years will be a thrilling phase for the auto industry. Automobile manufacturers will invest handsomely in this emerging technology to stay relevant. It will be interesting to know whether auto companies in India will maintain a balance between conventional vehicles and electric ones or tilt towards one.
Companies have to adopt emerging technologies to stay relevant. Past instances show that the ones which didn’t adapt to changing tech like Kodak, Nokia, Fujifilm, Yahoo etc lost their way completely.
Despite the problems that are likely to come along the way for every stakeholder in the automobile ecosystem, the EV category will also bring new opportunities in the industry.
📬 Stay Charged with EV Insights! 📬
Love our EV content? Leave your email with us and be the first to know when we publish new blogs, tips, and insights. No spam, just top-notch content to keep you ahead in the EV game. Drop your email below and join the EV revolution!
