EVs to help auto component industry revenue grow up to 11% by 2027: Report
India's auto component industry revenue is likely to grow by up to 11 per cent in the next five years from local manufacturing of electric vehicles. A report shared by rating agency CRISIL, estimates the revenue coming from electric vehicle parts by 2027 to swell to around ₹72,500 crore amid increasing electrification. The agency said that growth of EVs in India will continue during this period along with vehicles with internal combustion engines.
The estimates shared by CRISIL is in stark contrast with what the auto component industry saw during last fiscal when the EV components' share stood at just one per cent with ₹4,300 crore revenue. According to the report, revenue from EV components is likely to increase at a compound annual growth rate of more than 75 per cent.
The report estimates that around 60 per cent revenue from the battery segment and about 15 per cent each from drivetrains and electronics. “EV components such as batteries, drivetrains, electronics and others present an opportunity for auto component makers to diversify their revenue base beyond ICE (Internal Combustion Engine) vehicles," the report says. The report also estimates 90 per cent of the EV component supplies will be for two-wheeler and four-wheeler segments.
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CRISIL based this report after an analysis of 220 manufacturers working in the auto sector in India. These companies make up for nearly one third of the auto components market.
The report says that the transition to EVs will create both opportunities and challenges for domestic auto component makers. "Companies are already investing in developing electric components, both with established ICE Original Equipment Manufacturers (OEMs) and with new-age, pureplay EV makers," said Naveen Vaidyanathan, Director at Crisil Ratings.
Two-wheelers and four-wheel segments are expected to have increased penetration with 19 per cent and 7 per cent respectively, over the next five fiscals. However, commercial vehicles are expected to see lower penetration at around 3 per cent.