EV share in auto components to be 9-11% by fiscal 2027

Revenue of the electric vehicle (EV) components' market in India is likely to rev up at a compound annual growth rate of 76 per cent to Rs 72,500 crore in fiscal 2027 from Rs 4,300 crore last fiscal.

That will take the share of EVs in the overall automotive components market to 9-11 per cent - up from a negligible 1 per cent currently - even as the supply of parts for internal combustion engine (ICE)-driven vehicles also rises.

Pushan Sharma, Director, Crisil Research, says, "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 per cent (from 2.5 per cent currently), over the next five fiscal. Commercial vehicles, the other large auto segment, will see far lower penetration at 3 per cent (0.3 per cent currently) because of unfavourable economics."

The transition to EVs will create both opportunities and challenges for domestic auto component makers, indicates a Crisil analysis of 220 manufacturers, which account for a-third of the auto components market.

Naveen Vaidyanathan, Director, Crisil Ratings, says, "EV components such as batteries (will account 60 per cent of EV component revenue by fiscal 2027), drivetrains (15 per cent), electronics (15 per cent) and others (10 per cent) present an opportunity for auto component makers 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, pureplay EV makers. Almost 90 per cent of the EV component supplies will be for two-wheelers and PVs."

The Indian electric vehicle component market is growing on account of the declining prices of the components and increasing adoption of EVs, driven by the rising environmental concerns and strong government support. The accelerating growth has already seen that the EV contribution has surpassed more than 50 per cent vehicles sold in 3 wheeler segments in the current scenario.

Talking to Bizz Buzz, Nitin Kapoor, MD, Saera Electric Auto Private limited, said: "Battery cells and packs, battery management systems (BMS), electric motors, thermal management systems, DC–DC converters, and charging kits are just some of the components that go into an EV."

According to India's 2030 vision for e-mobility, 70 per cent of all commercial cars, 30 per cent of private cars, 40 per cent of buses and 80 per cent of two wheelers and three wheelers sales will be electric. This translates into 102 million EVs to be playing on Indian roads, India is already gearing up for localization drive, and the localization percentage are increasing the EV share in auto components will also grow substantially and will bring in new opportunities, he added.

Therefore, with the increasing production and sale of EVs, the demand for OEM and aftermarket components, respectively, will continue increasing in India and so will be its share in the overall auto component market.