Ringing alarm bells across the automotive sector with the deteriorating conditions of the pollution levels in the country, the Indian government has taken several aggressive steps to focus on implementing a Shared, Connected, and Electric Mobility Solution in the country with a hefty aim of securing 100% electrification by 2030.
Regarded as a game-changer in the automotive sector, EV technology has come forward as a new class of vehicles that have enamored Indian consumers with its practical features and liberates the common class from the rising tensions of fuel economy.
Like every coin who have two sides, the Electric Vehicle (EV) segment of India is currently facing challenges in the price section of these new vehicles due to slow and imported electric vehicle components and unsteady supply chain issues.
EV Supply Chain in India is currently stretched thin under the heavy import duty placed on procuring its parts and batteries due to the lack of local manufacturing facilities in the country.
Emphasizing the need for a strong EV Supply Chain in India, here are some of the pressing challenges the EV industry is currently dealing which also stresses the need for a strong EV Supply Chain in India.
Is a Strong EV Supply Chain in India a Necessity?
In a recent report, the electric vehicle industry in India has been forecasted to reach around $16 billion by 2027, growing at a CAGR of 47 percent during 2022-2027.
However, the road to full electrification is filled with several hitches, that include,
- Ever-changing government regulations and other EV manufacturing restrictions and other technological advancements had a substantial impact on cost economies.
- India’s EV market is still experiencing the after-effects of COVID-19 lockdown along with semiconductor shortages, non-banking finance corporations’ liquidity crisis, etc.
- Lack of manufacturing facilities in India poses another serious issue to EV Supply Chain in India since the cost of purchasing an EV has become a barrier to electric vehicle adoption.
- Lack of proper Charging infrastructure through rapidly advancing is still not enough to cover India’s vastly populated region.
With new start-up firms emerging in the EV field, the primary focus of every OEM should be on establishing a stable supply chain of raw materials needed for building an EV ecosystem, as this is an important determinant of competitiveness.
Despite pointing out some of the most pressing challenges of the EV Supply Chain in India, one should be ready to face newer challenges to emerge anytime as newer technologies are created in this domain daily, thus increasing the possibility of supply chain network improvement.
Steps to Strengthen EV Supply Chain in India
Proving an impetus to the growth of electric vehicle adoption in India, the government has laid out various EV-friendly schemes like PLI, FAME-I & II along with scrapping policies to strengthen the supply of electric vehicle parts and the raw materials needed.
EV Supply Chain Localization
Regarded as the biggest factor in accelerating the steady supply of raw materials, supply chain localization has received massive support from Atmanirbhar Bharat and Make in India initiatives that have assisted in minimizing the heavy reliance of electric mobility firms on imports.
Since rare earth minerals are frequently used in EVs like magnets, electric motors and various other components of an electric vehicle, their steady supply with low-cost procurement is another big challenge for EV Supply Chain in India.
Accounting some of the main components required to manufacture an electric vehicle include, chassis and body, battery and thermal dynamics management systems, battery packs, electric motors, and power electronics.
Since the last three items are unique to EVs and contribute a little more than 60 percent of an EV’s total cost, local production of these components minimizes the prices of the overall vehicle and benefits both the manufacturer and the end user.
Impact of Customer Anxieties
In a heavily populated country, consumer preferences are often influenced by vehicle performance, which can be seen as an important aspect in determining the need for EV Supply Chain in India.
Due to the vast landscape of India, the establishment of EV charging infrastructure is a daunting task to employ which leads to a slowdown in the purchasing capacity of EVs.
Frequent battery replacements and lack of charging facilities are hindrances to EV adoption and therefore it is critical to address these issues by providing more incentives to consumers while boosting EV Supply Chain in India.
Under a proper strategic framework and public-private partnership in the EV space, EV Supply Chain in India will thrive in the long run.
Though the government has been pushing for the establishment of a nationwide network of charging stations along with offering multiple incentives in establishing manufacturing facilities, the role of public-private partnership is the key to accelerating the drive for electric mobility in the country.
In simpler terms, the success of a sustainable EV goal largely depends on two key factors: affordability and availability of public charging stations.