Mumbai: India’s electric vehicle makers are bracing for a major hike in prices across models on the back of rising input and component costs of EVs.
Two-, three- and four-wheeler EV manufacturers are under severe pressure to increase prices, industry experts say, and the price hike would be in the range of 6-8% across the board starting next month.
Some companies including Tata Motors and Ather Energy have already increased prices, while several others such as Hero Electric and Kinetic Green Energy are reviewing the quantum of price hikes.
“There is a sharp increase in upstream raw material prices. The affordability gains realised in the past few years, and rising prices of nickel, lithium and other materials have been impacted by the Russia-Ukraine situation. It is expected that average EV battery prices will be higher by 5% compared to last year,” said Ravi Bhatia, president of Jato Dynamics, a global supplier of automotive business intelligence.
Russia supplies about 20% of the world’s nickel, a critical element in batteries used in EVs.
Every manufacturer is facing margin pressures, but they are also adopting a ‘wait and watch’ mode to see who takes the lead in hiking prices.
“The last month saw the highest battery price increase. The increase may narrow the price advantage and dampen buying to an extent,” said Sohinder Gill, CEO, Hero Electric and director-general, Society of Manufacturers of Electric Vehicles (SMEV) .
Batteries account for nearly 50% of the total cost of EVs.
Battery suppliers have begun putting pressure on Original Equipment Manufacturers (OEMs) as well.
“There is at least a 20-22% input cost pressure from the battery suppliers. All OEMs are in the same boat. We are all studying the impact and will announce a hike soon,” said Sulajja Firodia Motwani, CEO, Kinetic Green Energy, a leading player in electric three-wheelers.
The March to June 2022 period will see global cell prices going up by 20-30%, said Anand Kabra, vice chairman and managing director of Battrixx, a battery pack supplier to two wheelers.
“Although last year saw a 15% increase, it was absorbed by the manufacturers. We have started sounding out our customers to increase prices,” Kabra said. “This time there is a huge demand supply mismatch. It is a seller’s market, and they are calling the shots.”
Most OEMs in China have raised their pre-subsidised prices substantially and removed discounts citing increased raw material cost, and Indian OEMs will face similar pressure, Bhatia of Jato Dynamics said.
Tata Motors has raised the prices of its Nexon, one of the largest selling electric SUVs, by Rs 25,000 to a range of Rs 14.54 lakh to Rs 17.15 lakh.
“Between December 2021 and March 2022, the price of the Nexon has increased by 1.9%,” said Bhatia.
Ola electric is also looking to increase scooter prices by at least 3-5% when its next purchase window opens in April.
“Today (March 18) is the last day when buyers can get the S1 Pro scooter for Rs 1.3 lakh,” chief executive Bhavish Aggarwal said on social media.
Electric two-wheeler sales have been steadily growing.
In the previous calendar year, sales stood at 136,699 units, accounting for 1.11% of total sales compared to 0.21% in 2020.
Electric passenger car sales stood at 14,874 units in the 2021 calendar year, or 0.48% of total sales.
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The sales of electric vehicles have grown 113.38 percent in UP in 2020 when compared to 2021, 242% in Karnataka, 427% in Tamil Nadu,318% in Maharashtra and 109% in Delhi.