There is a $100 billion revenue opportunity across the electric vehicle (EV) value chain in India, spanning battery, components and manufacturing of vehicles, according to a new report by Bain & Company.
By 2030, about 40-45% of all two-wheelers (2W) and 15-20% of all four-wheelers (passenger vehicles) sold in India will be electric, it said.
The adoption will be a result of 12-13 million new 2W and 1 million new 4W passenger electric vehicles being sold in India annually by 2030, the report released Thursday added.
“Companies are going to need to make moves across the value chain backward and forward, to deliver this end-to-end EV solution and it doesn’t mean that everyone that makes cars needs to make batteries or needs to set up their own charging stations but they will need to at least have partnerships or tie-ups in the space,” Mihir Sampat, partner, Bain & Co’s advanced manufacturing and services practice, told ET in an interaction.
The predicted adoption will primarily be driven by five factors – electric vehicles are becoming more price competitive on a capital cost basis, growing infrastructure to support EVs with charging and battery swapping, materials or product investments going into the market, government-backed incentives, vehicles getting more suited to the market and consumers’ understanding of economic benefits of owning EVs.
Gaps in capital costs for EVs in India have materially reduced due to a sustained global decline in battery prices until 2021.
Battery prices marginally increased in 2022 due to inflationary pressures but there were government subsidies alongside domestically. A high-speed 2W EV vehicle, for instance, costs only 15%–20% more than its ICE equivalent in Delhi with subsidies factored in, the report said.
For commercial vehicles in India, battery electric vehicle (BEV) market penetration will be more modest, with light commercial vehicles (LCV) up to 25%, medium and heavy commercial vehicles (M&HCV) up to 5% and buses up to 20% by FY30, the report added.
To aid in EV adoption, Bain & Co said, companies will need to build or source new capabilities like software and system integration, develop competitive EV platforms for the mass market, design new channel structures with sustainable economics, and manage an ecosystem of EV partnerships, as well as adopt sustained focus on safety through greater localisation, quality control and audits, and standardisation so as to quell consumer concerns.
A revenue pool range of $76 billion to $100 billion by 2030 would potentially translate to an $8 billion to $11 billion participant profit pool.
The revenue pool may be realized from areas in the EV supply chain such as Battery ($10-13 billion); EV charging auto components, software, and telematics ($7-9 billion); other components such as chassis, motors and plastic parts ($7-11 billion); auto OEM, sales, and service ($40-51 billion); charging ($6-8 billion), battery swapping ($1-2 billion); and mobility ($5-6 billion).
“There’s no cell manufacturing in India right now… companies are trying to sort through both chemistry and raw materials. But we do believe by 2030 there will be some localization of cell manufacturing, rest will continue to be imported. There will definitely be localization of battery management systems (BMS) and packaging, some happening within the OEM and some outside as well,” Sampat said.
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