Tuesday | Mar 18 2025 | 02:14:44 PM
As India embraces the global shift toward electric vehicles (EVs), the automotive sector faces a dynamic landscape filled with both challenges and opportunities. The transition is driven by evolving government policies, environmental concerns and shifting consumer preferences. With India positioned as one of the world's largest automobile markets, the electrification journey presents a crucial moment for innovation, investment and collaboration across the entire automotive value chain. Understanding and addressing the unique challenges faced by different stakeholders will be key to ensuring a successful and sustainable shift.
Manufacturers: Indian Original Equipment Manufacturers (OEMs) play a crucial role in making EVs more accessible and widely accepted by both consumers and businesses. By eliminating reliance on imported parts, manufacturers can significantly reduce costs, making EVs more affordable. Additionally, a locally sourced supply chain enhances the quality and reliability of components, leading to better after-sales service and quicker availability of spare parts. With complete in-house control over technology and production, Indian manufacturers can also tailor EVs specifically for Indian road conditions, climate, and usage patterns. Each automobile brand can integrate its unique selling propositions (USPs) into EVs, ensuring differentiation in the market while catering to specific consumer needs. Moreover, an indigenous EV ecosystem helps OEMs build a robust infrastructure, including charging networks and service centres, which further enhances adoption.
The recent Budget announcement to exempt customs duties on EV battery materials is a landmark step that reinforces the government’s commitment to building a robust and sustainable EV ecosystem in India. This initiative aligns seamlessly with the country's push for clean energy and the Make in India mission. By reducing the cost of crucial battery components, it will encourage domestic manufacturing, foster technological innovation, and strengthen the entire EV value chain, from component suppliers to OEMs.
Additional opportunities, such as government incentives like the Production-Linked Incentive (PLI) and FAME schemes, also help promote local EV manufacturing and innovation. Manufacturers also have the potential to position India as a global EV manufacturing hub. However, challenges including supply chain vulnerabilities due to reliance on imports for critical battery components, the need to recalibrate manufacturing processes for EV-specific technologies and the necessity of upskilling the workforce in specialised areas like battery management and software integration still persist, though they can be navigated by creating these imported parts in the country itself.
By proactively anticipating global technological trends, a manufacturer can be among the first in India to establish dedicated facilities catering to the growing EV market. The focus on vertical integration enhances efficiency and cost-effectiveness, making EV adoption more viable.
Customers: EV buyers have several advantages when considering electric vehicles (EVs), such as cost efficiency due to lower running costs compared to traditional internal combustion engine (ICE) vehicles, as well as significant environmental benefits through reduced carbon emissions. Additionally, government tax benefits and subsidies make EVs more accessible to a wider audience. However, a fully localised EV industry translates into better affordability, customisation and reliability for the consumer. Locally manufactured EVs mean lower production costs, reducing the overall purchase price and increasing accessibility across different income segments.
Additionally, manufacturers can design EVs keeping in mind Indian terrain, weather conditions, and driving habits, ensuring better durability and efficiency. Since after-sales service and spare parts availability remain major concerns for buyers, a domestic EV industry would lead to improved service networks, faster response times and lower maintenance costs. Moreover, consumers can benefit from vehicles that align with their preferences—such as increased boot space, more rugged designs for rural areas, and EVs that integrate seamlessly with existing fuel-based models for smoother transitions.
The disadvantages of the current EV market, such as the high upfront costs of four-wheel EVs, range anxiety due to limited charging infrastructure affecting consumer confidence, and uncertainty surrounding EV resale value, can be mitigated with a holistically 'Made in India' electric vehicle.
Dealers: Dealers entering the EV market create new revenue streams for themselves through maintenance, battery management and software updates, while early adoption of EV-focused showrooms help position them as market leaders. However, dealers also face roadblocks such as the need for significant infrastructure investments, including charging stations and specialised service equipment. A domestically manufactured EV ecosystem reduces dependency on foreign supply chains, ensuring consistent stock availability and faster deliveries. This means a reduced waiting period for customers, ultimately boosting sales.
With Indian EVs designed specifically for local conditions, dealerships can confidently market vehicles that promise higher efficiency, lower running costs, and better serviceability. Training staff to handle EV-related maintenance and support also becomes easier when the entire technological know-how is developed locally. Additionally, dealers can leverage stronger OEM support for custom modifications catering to niche customer demands, further driving EV adoption. Managing inventory by balancing traditional internal combustion engine (ICE) vehicles with emerging EV models is another concern that can be subverted by local manufacturing.
Used Car Companies: Used car companies, a much-overlooked segment in the EV market, have significant growth opportunities to consider. One major opportunity lies in establishing a strong resale ecosystem for EVs, catering to the growing demand for sustainable transportation. However, high maintenance costs of imported parts, lack of these parts and software updates that depend on foreign suppliers, lead to lower resale values. If Indian OEMs produce EVs tailored for the local market, these concerns are then minimised.
Standardised components and better local servicing enhance the longevity of E-vehicles, making them more attractive to second-hand buyers. Additionally, offering value-added services such as warranty-backed programs and standardized battery health assessments can enhance consumer confidence and drive sales. However, challenges still persist, including uncertainty around residual value due to concerns about battery degradation.
Technology Providers: Technology providers in the EV industry have the opportunity to drive innovation by developing alternative battery technologies and advanced power management systems. By creating in-house battery management systems, smart charging solutions, and telematics platforms, Indian companies can offer cost-effective and region-specific solutions. This also enables seamless integration across different EV models and brands, ensuring a more unified and consumer-friendly experience.
With localised data management and connectivity solutions, cybersecurity concerns are reduced, making Indian EVs safer and more reliable. Furthermore, collaboration between technology providers and OEMs will lead to better infrastructure, such as efficient charging networks, predictive maintenance features, and AI-driven vehicle optimisations that enhance EV performance based on real-time Indian road conditions. Scalability, though, still remains a concern, with the need to meet the growing demand for technological solutions across a vast and diverse market.
In conclusion, India’s journey toward electrification presents a myriad of challenges and opportunities for all stakeholders. By addressing infrastructural, financial and technological bottlenecks through a collaborative and phased approach, the nation can accelerate its transition to a self-sustained Made In India EV Ecosystem, offering cleaner transportation and positioning itself as a global leader in sustainable mobility. A concerted effort from policymakers, industry stakeholders and consumers will be essential to successfully navigating this electrification shift.
The above article has been written by Arvind Goel, the Non-Executive Vice Chairman of Tata Autocomp Systems.
