Automotive sector

India’s automotive sector shifts to electric mobility

The automotive industry is one of the key sectors of the Indian economy. According to 2021 reports, automotive sector’s contribution to India’s overall GDP stands at 7.1% and 49% of manufacturing GDP, with annual revenue of Rs 7.5 lakh crore and export of Rs 3.5 lakh crore. Currently in the top five, India’s automotive sector is expected to be the world’s third largest automotive market by volume by 2026.

The sector has evolved significantly over the past four decades, especially in the past four to five years when it has witnessed a massive push in electric mobility. The government is actively promoting the adoption of electric vehicles (EVs), with subsidies under the FAME-II program in India being one of the main means of achieving this. Simply put, the industry is changing for the better, but not without challenges.

Technology with a cause

“We are living in one of the most disruptive and interesting times in the industry as demand for mobility increases, but paradoxically, with this growth comes challenges such as climate change, congested cities and traffic issues. We are in an era marked by a turn of the century due to growing sustainability issues and supported by emerging trends in electromobility, connectivity, digitalization and automation,” observed Kamal Bali, Chairman and Managing Director of Volvo Group India.

While technology has disrupted all industries, in the case of the automotive sector the impact is direct on the future of a sustainable India.

“It was easier in the past when it came to gasoline and diesel. However, when it comes to future technologies, there are many combinations and many aspects that are continuously discussed and constantly changing. The government also believe that there are many paths to achieving carbon neutrality,” added Naveen Soni, Chairman of Lexus India, explaining that the role of technology is ultimately to provide solutions to people’s problems.

Citing the example of Lexus aiming to make all of its vehicles electric by 2035, he explains how self-charging hybrid electric vehicles will play an important role in paving the way to carbon neutrality.

Brakes and turns:

While going green is beneficial for all stakeholders from the planet to the people, the Indian automotive industry is fraught with pitfalls. The race to become the automotive leader has started again with plans for electrification. While experts have called now the right time for new players to enter the market and claim leadership positions, the pandemic, Ukraine, component shortages and recent electric vehicle fires have all become a series of reverse.

Over the past two or three years, the Indian automotive sector has seen many young players enter the space of electric two and three wheelers in hopes of disrupting the industry. This has opened up opportunities for investors and shareholders and consumers have also started to adopt electric vehicles. The explosions of the electric two-wheelers left a dent in the momentum. People are canceling bookings in record numbers, again widening the gap in the market.

These are associated with some of the other challenges of electric mobility plans such as lack of standardization, charging infrastructure especially on highways for longer journeys, lack of service options, range limited electric vehicles for commercial and passenger vehicles and the right battery. Chemistry for electric vehicles.

Despite this, industry captains gathered at the BW Auto World Summit 2022 were positive about India’s electric future.

The right road:

“The Indian car market is already the fifth largest. Our goal to be the third largest by 2030 is ambitious and grounded in reason. Covid and semiconductor shortage are significant challenges but there is a big turnaround in the coming years,” said Prashanth Doreswamy, President and CEO of Continental India, adding, “We look forward to a increase in content per vehicle thanks to assistance vehicles, connected functionalities. , electrification and others.

Doreswamy pointed out that 50% of car sales in India are currently hatchbacks. “If you electrify hatchbacks, they will cost a lot more today, so passenger cars still have a few years to see new models of electric vehicles, but cars are increasingly software-defined. cars will require advanced technology. It will require redesign and re-evaluation,” he said.

Yet another challenge in India’s electrification plans is the electricity crisis. India is facing a shortage of coal which greatly affects the supply of electricity. Since electricity is the main source of electric vehicles, the government must quickly address this shortcoming.

“Solar power plants and electric vehicles can be seen as a good combination in the future, as they reduce the load on the local grid. India is already at the pilot stage for such projects and in the coming months, if one of them is successful, it could be replicated across the country. As a country, we are blessed with sunshine and we must take advantage of it,” added Shubhankar Chaudhry, CEO of One Moto India.

Time requirement:

The Indian automotive industry is expected to register strong growth in the coming years, recovering from the effects of the pandemic. Electric vehicles are expected to see an increase in sales, especially the two-wheeler segment which dominates the Indian market in terms of volume, over the next two years. Consumer behavior is inclined towards the green option.

“If someone wants to buy a combustion engine, whether it’s a gasoline or diesel vehicle, they can buy it within the next two to three years at best. After 2025, most vehicles will be electrified and only a few manufacturers will produce gasoline and diesel vehicles,” said Maxson Lewis, Founder and CEO of Magenta.

While some of the changes are going in the right direction, the need of the hour in the automotive industry is to identify obstacles that may arise in the future and develop a corresponding strategy. Topping the list are a skilled workforce, robust research and development centers, low production and manufacturing costs, more affordable electric vehicles with standard range, and an ecosystem to integrate electric vehicles into consumers’ lifestyles.

Opportunity of a lifetime:

“The opportunity to create real value is greater than ever. We set ambitious goals that we could not have imagined ten years ago. Automotive could not have talked about net zero emissions, but now, as a country, India is looking at this goal by 2070, and the automotive industry will achieve it sooner,” said Kamal Bali of Volvo Group India.

For him, the “most satisfying factor” in this transition is the protection of the people of the next generation.

“This is one of the crucial phases for our nation, as the automotive sector and its young talents come together to meet the needs of a very ambitious India. The world of mobility and automotive will experience a complete overhaul , offering leaders a unique chance to be part of the disruption, where ICE Engines will give way to Engines, Products will give way to Services, Vehicles, Infrastructure, Drivers, Passengers and everyone on and off of the road will talk to each other,” added Bali.

India is also a major automobile exporter and predicts strong growth in the coming years. Recently, Prime Minister Narendra Modi also urged the industry to make India a global semiconductor hub based on the principles of high technology, high quality and high reliability.

Alternative fuels and energy carriers, automation, new transport concepts with hub-to-hub and last mile, connectivity and new business models mark the future roadmap for the automotive sector in India.