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Key Points

The shift to EVs threatens traditional engine part makers but creates new opportunities in advanced components like batteries and smart systems. Suppliers can pivot to EV-specific parts such as traction motors and BMS to stay competitive. India’s EV adoption is set to rise, especially in two-wheelers and three-wheelers, reaching 68% penetration by FY29. However, reliance on imports and global competition pose challenges for local manufacturers.

Key Points: EV Shift Threatens ICE Parts Makers But Opens Tech Opportunities

  • EV transition risks ICE-dependent suppliers
  • Growth in lithium-ion batteries and BMS demand
  • ADAS and smart cockpits boost tech adoption
  • Electric 2W and 3W penetration to surge by FY29
2 min read

EVs pose threat to manufacturers of engine components, but also open opportunities in advanced tech: Report

Ambit Capital report highlights EV disruption risks for ICE suppliers but reveals growth potential in batteries, motors, and smart tech for auto components.

"While EV disruption poses existential risk for ICE suppliers, it opens opportunities for EV components like batteries and motors - Ambit Capital"

New Delhi, May 5

The ongoing transition to electric vehicles (EVs) is expected to reshape the auto component industry by increasing content per vehicle and creating new avenues for suppliers, according to a recent report by Ambit Capital.

However, it also highlighted that while the rise of EVs poses a threat to manufacturers dependent on internal combustion engine (ICE) components, it also unlocks significant growth opportunities.

The report said "While EV disruption poses existential risk for the suppliers of ICE-dependent components, it opens up several opportunities for the component suppliers to provide a) EV components like li-ion batteries, traction motors, controllers, BMS etc"

It added that the component makers can diversify into EV-specific parts such as lithium-ion batteries, traction motors, controllers, and battery management systems (BMS).

Additionally, EVs enable the adoption of advanced technologies like regenerative braking, advanced driver-assistance systems (ADAS), and smart cockpits, further boosting the role of suppliers in the value chain.

Another advantage for component suppliers comes from increased demand for certain parts due to EV architecture. Components such as wiring harnesses, electronic control units (ECUs), and differential assemblies are expected to see greater content per vehicle compared to traditional ICE vehicles.

EV adoption in India is projected to grow gradually. Electric two-wheeler (2W) penetration is expected to rise from 6.3 per cent in FY25 to 21 per cent by FY29.

Similarly, passenger vehicle (PV) penetration is likely to grow from 2.6 per cent to 10.4 per cent during the same period. In contrast, electric three-wheelers (3Ws) are expected to witness rapid adoption, surging from 22.9 per cent in FY25 to nearly 68 per cent by FY29.

However, the report cautions that many EV components are currently imported, which may result in intense competition, especially in the early stages of the EV transition.

Despite the growth potential, the shift towards EVs also poses key risks. Suppliers heavily dependent on engine and select transmission components may face existential challenges.

The report also flagged three key challenges for the auto components industry - the USMCA/tariff regime, economic weakness in the EU, and competition from Chinese players.

As India's auto component industry is heavily reliant on exports to the US and EU, these challenges could strain finances in the near term.

- ANI

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Reader Comments

Here are 6 authentic Indian perspective comments for the EV transition article:
R
Rahul K.
This transition is inevitable but we must ensure Indian manufacturers don't get left behind. The government should provide more incentives for local EV component production rather than relying on Chinese imports. Make in India should be the focus! 🇮🇳
P
Priya M.
As someone working in auto components sector, this shift is both exciting and scary. Many small suppliers in my city are worried about their future. Hope the government creates proper reskilling programs for workers affected by this change.
A
Arjun S.
The 3-wheeler EV adoption numbers are impressive! E-rickshaws are already common in Delhi. This could be India's strength - affordable last-mile electric transport solutions. We should focus on this segment where we can lead globally 🚛⚡
S
Sunita R.
While EVs are good for environment, we must also think about electricity generation. Most of our power still comes from coal. Unless we shift to renewable energy, are we really solving the pollution problem? Need holistic approach.
V
Vikram J.
The report mentions competition from Chinese players - this is worrying. Chinese EVs and components are flooding global markets. India needs strong policies to protect domestic industry while maintaining quality standards. Jai Hind!
N
Neha P.
As a tech enthusiast, I'm excited about the advanced features coming with EVs - smart cockpits, ADAS etc. But affordability is key for Indian market. Hope the prices come down soon so middle class families can also benefit from this technology revolution.

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