Homegrown Supply Chains Will Usher Mass Adoption Of EVs

Gaurav Kumar. Jan 24, 2023

By now, there is a consensus that the adoption of electric vehicles in the country is a strategic priority to challenge the rising cost of conventional fuel and environmental concerns. Supported by the Government’s mission of ‘Atmanirbhar Bharat’ and national policy initiatives such as the PLI scheme, we have started witnessing sprouts of a local EV supply chain. While supply chains were disrupted during Covid, pushing timelines for mass adoption, the momentum to build a robust EV ecosystem has picked up speed. To this, development of a homegrown supply chain will ensure reliability and cost optimisation for EV OEMs, and drive faster market roll out.

Here are some of the ways companies can look at developing their own indigenous supply chains-

♦ Design for India, from India: The first step to nurturing a future-ready local supply chain is to instill a local component availability philosophy at the design stage. This entails turning inwards, to design from the ground up and innovate to deploy homegrown substitutes. Thus, OEMs need to focus on modularity while sourcing and integrating the powertrain, battery pack, stress points, and component packaging, keeping in mind the Indian conditions. The approach not only leads to better unit economies but also makes the supply chain more resilient against potential geo-political interruptions.

♦ Make innovation a shared responsibility: OEMs need to identify vendors who are ambitious to partner on their innovation journey. The co-creation helps all stakeholders see EVs as a sunrise space, instead of a branch out of the traditional internal combustion engine (ICE) vehicle industry. For this to happen, OEMs will need to create a framework where they can safely transfer granular consumer insights, global manufacturing best practices, and any other protected relevant information to their trusted supplier partners. They also need to help OEMs transition from their ICE product lines to the EV market, customise as per the EV requirements, and even build some critical components from scratch. At the same time, suppliers also need to raise their hand to meet the challenge of delivering on the quality parameters, developing, or safeguarding the competitive edge for OEMs, and ensuring that the supply chains become more sustainable in the longer run.

♦ Build alternative sourcing capabilities: Given the dynamic trends centering the current global supply chain, OEMs need to also optimize and prepare for contingencies, and build alternative strategies to approach a shortage problem. This includes having an alternative vendor base combined with internal capabilities to not impact production. In the long run, this will help OEMs negotiate better prices, cultivate knowledge to a large supplier base, and reap the benefits of diverse expertise that each of these suppliers may have.

There is a lot of tremendous growth currently in the EV manufacturing space, as compared to say even five years ago. The industry has mastered EV technology that is needed for the Indian roads and now is the time to accelerate the course of mass production for a market rollout and thereby achieve economies of scale. A robust supply chain, with a persistent approach from both the industry and the government will help us achieve India’s EV ambition.