That e-vehicles are the future, is no longer true. E-vehicles are already here and penetrating the market faster than anything else ever has.
India could see an exponential growth in EV consumption by 2030. Completely understanding this forecast and grasping the endless possibilities it brings with it, auto component manufacturers should definitely look at opportunities to innovate, produce and supply some of the components essential for EVs. As the demand for EV rises, it is a given that the prices, supply and production of ICE components will be majorly affected.
E-vehicles are the present and are taking over at a fast pace. The trend will continue with such a powerful momentum, that within the blink of the eye, the landscape will have changed.
Having said that, it’s not only the decline and death of petrol and diesel, but also words such as crankshafts, camshafts, pistons, filters and so many other spare parts that have come under the threat of extinction. The auto industry so far, has been in denial, but things are finally moving as is evident from the numerous launches, acquisitions, valuations, news articles that you see in the EV space by traditional and new players. The battery prices of EV’s have seen a steady decline as manufacturing abilities amp up and they are only expected to fall further due to the demand, technological advances and indigenization.
Four major players are leading to the disruption of the automotive industry- electrification, connectivity, shared mobility and autonomous driving. Couple this with government regulations in light of climate change and auto-component suppliers need to buckle up to stay in the game.
As per a NITI Aayog report, it is estimated that India could reduce 64 percent of energy from road transport and 37 percent of carbon emissions by 2030, if they opt for shared, electric and connected mobility.
With this in mind now there is a need for auto-component suppliers to re-look at their product portfolio and build an electric vehicle division within the company. Instead of giving up the current business, there is a need to jump onto the electric mobility bandwagon and diversify to keep the current business afloat in the future.
The major risk auto component suppliers shoulder is that several of the systems or spare parts that were essential to the ICE vehicles are not required in an EV setup. This includes exhaust and fuel systems for example. EVs require fewer components when compared to the set up required for an ICE. Figuring out the manufacturing for auto components that an EV would use, would have to be the first round of change that an auto component supplier brings to his business.
As an automotive supplier that has been providing ICE components to the OEMs, it is now time to revisit and restructure several aspects of the business and tackle infrastructural and supply chain challenges to better prepare for the inevitable shift of a large consumer base to EVs. In preparing for this shift kit would be ideal to assess the financial flexibility and technological prowess that would be required of such a mammoth task. Questions like would you need to invest in new technology or how much finance would be required during this shift are essential questions to be answered.
Next step would be for auto component suppliers to understand the skill they would require and hire and fire accordingly. It is the new set of skilled workforce that will drive the company in the future and be better equipped to diversify within the EV spectrum. It is important to note that this also in a way hints towards the shift of managerial tasks to the younger generations who are more akin to technology.
In addition to investing in research and development aimed at understanding consumer behaviour, better supply chain systems and other important technological advancements, auto component suppliers must also start to look at opening up and eventually focusing their production and supply on components in the EV system like the battery pack – crucial to the running of Evs.
Another important aspect to keep in mind is to have a seamless and unfaltering line of raw material supply early on in the game. As component suppliers start to shift to the electric mobility supply race, there is sure to be a mismatch in the supply and demand cycle, leaving those without a strong backend high and dry.
There are a bunch of push and pull factors that are at play driving EV into the limelight for both consumers and the suppliers. Some of the push factors include government regulations and incentives and the advancement of infrastructure and technology. The pull factors, on the other hand, which primarily affect the customer, include reduced battery prices and increasing oil prices and the growing loyalty of existing EV owners especially with high-performance vehicles.
This is just the beginning. There are various improvements and innovations that can be done in this field and technology should not be taken lightly. Big or small, every innovation that furthers the sector or even gives the existing technology some competition will be welcomed with open arms, as the industry works towards finding a strong footing. Customers continue to be demanding in terms of their requirements for performance and value for money and that’s something that’s not going away in the automobile segment and by extension for the auto component suppliers. The need to be on one’s toes shall remain perennial, whether the wheels of the automobiles are driven by the explosion of petrol or through the electric voltage of a battery.
Views expressed above are the author’s own.
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