The Electric Vehicle Sector in India is not as big as countries like China and the USA, but the EV sector has seen tremendous growth in the last five years in the country. It has the full potential to grow and beat Electric Vehicle Industries of other developed nations. The Central Government of India and concerned Authorities are continuously working on expanding the EV sector in the country. The campaigns like Make in India, Atma Nirbhar Bharat, limiting import from China, and other such initiatives will help the EV sector to prosper in the future.
Seeing a bright future of the EV sector in India, various foreign and domestic companies, and big OEMs have started investing in this industry. The decrease in imports from neighboring countries will encourage manufacturers and production companies to make the EV components locally. It will help produce a lot of job opportunities and improve the Automotive Supply Chain Management, which will lead to expanding the Electric Vehicle Industry in the nation. In the coming years, the Indian EV sector will draw more Investments from Strategic Tie-Ups for further development. The Electric Vehicle companies and major OEMs in the country are working for improving the range of EVs and trying to make it more affordable for the consumers. These subtle changes in the industry will encourage the Indian consumer to opt for EVs instead of Combustion Engine vehicles.
Pre COVID-19 Investment Scenario
Investment Scenarios in the EV sector post Covid-19 will be different from that of the pre COVID-19. Since the industry was flourishing and growing at a decent speed, both domestic and foreign companies were interested in investing in the Indian EV sector. Till the first quarter of 2020, the Electric Vehicle Industry had shown positive growth. Manufacturers focused on two and three-wheeler Electric Vehicles since both demand and sale were more of this category. The four-wheeler EVs saw very minimal demand due to a lack of proper EV infrastructure and facilities. Therefore, the primary revenue for the EV sector came from the e-bike and e-rikshaws.
The Government of India gave full support to the EV manufacturers and other OEMs and hence introduced various attractive schemes to encourage the consumers to opt for Electric Vehicles. For example, the GST was fixed to 5% on the purchase of an EV, as compared to regular 12% on other goods and services. The Government launched schemes like Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India (FAME) – II to give incentives to the EV buyers. Such a prominent scale, the ongoing expansion of the EV sector, attracted many OEMs to begin Strategic Tie-ups with the battery technology companies. Also, many foreign companies showed interest in investing in Indian Automotive companies. For example, a Japanese company, Softbank, would join hands with Mahindra Electric to collaborate in the EV Powertrain segment.
Post COVID-19 Investment Scenario
During pre COVID-19, many new startups got an opportunity to grow in the EV sector. Various companies started joint ventures to meet the increasing demands of EVs. The Government and Investors also supported the startups and various Joint Ventures. But, the unfortunate COVID-19 has slowed down the market, including the EV sector as well. The decline in the economy and lack of finances have reduced the funds raised for these recently established ventures. The decline in liquidity has also increased the problem of manufacturing. Therefore, the companies are cutting their production cost, resulting in slowing down the Electric Vehicle Industry development and expansion.
Although the market has slowed down due to pandemic, due to its strong backbone and fundamentals, the EV sector can bounce back. The increase in the price of petrol and diesel, and expensive BSVI automobiles, can encourage the consumers to go for the Electric Vehicles. Although the small investors may fall back, big Multinational Companies and Investors have seen a scope in upcoming EV startups and OEMs manufacturing battery, powertrains, and other essential EV components. Many Automobile companies like Tata Motors, Mahindra & Mahindra, Ashok Leyland have made separate subsidiaries for the Electric Vehicle manufacturing.
Therefore, the EV sector is one of India’s most promising and emerging industries, and many Foreign Investors are interested in joining hands with the Indian EV manufacturing companies and OEMs. Since most foreign companies are planning to shift from China to India, the nation will witness an exponential rise in manufacturing facilities and labor. These could be some of the positives for the Strategic Tie-Ups and Investors to join agreements and invest in India’s EV sector.