Indigenisation of EV Manufacturing Could be Worth $2.7 bn for India: CEEW

Indigenisation of electric powertrain components and battery pack assembly could produce a value addition USD 2.7 billion for the auto industry in India, in case of an EV transition

Indigenisation of electric powertrain components and battery pack assembly could produce a 5.7 percent higher output value addition worth USD 2.7 billion for the auto industry in India, in case of an electric vehicles (EV) transition, according to an independent study released by the Council on Energy, Environment and Water (CEEW).

The study adds that in order to tap into this potential, India must augment capacity in manufacturing electronics and electrical components. This would also enable it to retain its export share, given a global shift towards electric mobility. The study, supported by the Shakti Sustainable Energy Foundation, assesses the future course of the auto industry by comparing a scenario with 30 percent electric car sales in 2030 against a business-as-usual scenario with limited EV penetration.

Looking at the trinity of jobs, growth, and sustainability, the study estimates that jobs in internal combustion engine (ICE) manufacturing would increase by 7 percent between 2018 to 2030, even if India were to achieve 30 percent EV sales during this period. However, this would be 20 to 25 percent lower than the number of jobs supported, if the industry were to only produce ICE vehicles. Further, the auto industry would require creating a trained workforce in the country to achieve a successful transition to EVs. Hence, reskilling along with vocational training would be critical to achieving the EV sales target.

Amitabh Kant, CEO of Niti Aayog said that India is moving towards a shared, connected, and zero emissions world.

“The initial cost of EVs is likely to be on par with ICE vehicles in 3-4 years. For India’s auto industry to stay competitive worldwide in the coming decade, we must make India a global centre for the manufacturing of electric two-wheelers, three-wheelers, and compact cars. Innovations in battery manufacturing and setting up Giga factories in the country will also be crucial.”

The study also finds that importing battery cells for EVs would help drive a more favourable trade balance when compared to importing crude oil for ICE cars sold in 2030. The import burden per ICE car is 4.1 times higher for private vehicles and 5.7 times higher for commercial vehicles compared to the import burden of an EV over its lifetime, considering oil and cell imports, respectively.

In addition, the study finds that for India, the in-use CO2 emissions per electric car are 2 to 16 per cent lower than that of an equivalent ICE car over its lifetime. This highlights the climate benefits of an EV transition in India.