As per Pushan Sharma, Director, CRISIL Research, ” Improving cost viability of EVs versus ICE vehicles, and rising consumer demand for environmentally cleaner mobility will drive the transition to EVs. Among the key auto segments, two-wheelers and passenger vehicles (PVs) are seen driving the transition, with their penetration rising to 19% (from ~2.5% currently) and 7% (from less than 1% currently), respectively, over the next five fiscals. Commercial vehicles, the other large auto segment, will see far lower penetration at ~3% (0.3% currently) because of unfavorable economies.”
In India, the revenue of the electric components for electric vehicles is going to high up at a CAGR of ~76%, i.e. Rs 72,500 crore in 2027 from Rs. 4,300 crores last fiscal year. In the overall automotive components market, the share of EVs is going to go up from 9% to 11% from a negligible 1%.
The EV market will be both positive and challenging for auto component makers. As per Naveen Vaidyanathan, Director, CRISIL Ratings, ” EV components such as batteries (60% of EV component revenue by fiscal 2027), drivetrains (15%), electronics (15%) and others (10%) present an opportunity for auto component makes to diversify their revenue base beyond ICE vehicles. Companies are already investing in developing electric components, both with established ICE original equipment manufacturers (OEMs) and with new-age, pure-play EV makers. Almost 90% of the EV component suppliers will be for two-wheelers and PVs.”
The traditional auto component makers are not going to face the burnt of the new EV market, since 75% of revenue is from body parts, chassis, suspension, electrical, braking, lighting, and seating.
Maybe companies need the re-engineer EV products but with incremental investments. The balance of ~25% of auto components needs to be for ICE engines and transmission components to face challenges due to the EV transition.
The component part includes starters, alternators, fuel injectors, radiators, gear-box, clutch, pistons, cylindrical block, and exhaust system critical in an ICE vehicle but redundant in EVs.
Many companies are looking to de-risk their models by supplying EV components and increasing the non-auto and industrial products in the portfolio.