Will coronavirus disrupt India’s EV momentum?

Will coronavirus disrupt India’s EV momentum? Let’s look at the China, US and Europe facts and present situation. How will it impact India’s EV momentum?

Note: It’s very important to understand the Global scenario because of India’s dependency on China for sourcing EV components.

Global EV sales hit 4 million, soaring market sees next million in ...

Today, there are five million electric vehicles on the world’s roads. China is in the leading position in terms of the largest EV market, followed by Europe and the US.

Technological advancements are leading to a reduction in the battery cost and also scaling up production.  The fall in battery prices is essentially due to the increased economies of scale created by a booming EV market. The battery is a major component in an electric vehicle, the step towards cost reduction is highly important. China is dominant in the battery supply chain, as it accounts for around three-quarters of battery manufacturing capacity.

But, the Covid-19 pandemic is expected to derail the global e-mobility revolution and battery demand, particularly in China.

Let’s look at the following projections. (Projections calculated Before COVID 19 situation )

EV Company News For The Month Of December 2019 | Seeking Alpha

The interesting question is: What is the right forecast for Electric Vehicle sales? What will be the impact of COVID 19 on

  • Electric vehicle sales ( 2W, 3W, and 4W )
  • Complete supply chain
  • Cost economics
  • Consumer behavior

China is currently dealing with the slow down caused by the corona virus outbreak. Current situation in China has led to a delay in the production of batteries across all major manufacturers located in key coronavirus hit provinces. China’s major Li-ion manufacturing players, CATL and BYD, are faced with a high probability of additional production delays. The limitations of the labor movement will lead to a reduction in battery production. This coronavirus outbreak is expected to lower the output of Chinese battery manufacturers by around 26GWh in 2020. This will lead to a major impact on EV sales projections in the short term and also in the long term.

Globally, carmakers are looking for independence from Chinese battery manufacturers and aiming to secure the battery supply chain. China itself is expected to take a beating on the production of around one million vehicles. The country exports around $70bn worth of car parts and accessories worldwide, with nearly 20% going to the US.

In the current situation, the major challenge here is the industry’s over-dependency on China leading to disruptions in the supply of components. Do you agree with the statement?

Tesla Way :

It is very interesting to know the way Tesla is reacting to the current situation. Tesla is currently scaling up the production specially in the SUV category due to increased demand. However, the current coronavirus outbreak led to closed down its car manufacturing plant located in California.

Innovation in the slowdown. During this shutdown period, Tesla will implement ‘touchless deliveries’ by making use of its app and cars’ smartphone connectivity, to decrease any spread of the coronavirus. With the help of touchless deliveries, Tesla customers can unlock their new cars through the Tesla app at a delivery parking lot, sign any incomplete paperwork left in their car, and send back this paperwork to an on-site drop-off site before leaving.

Tesla stated that it will continue with some of its basic operations such as works related to charging infrastructure. While Tesla’s Gigafactory in Nevada will continue operating as normal.

All other manufactures such as Ford, General Motors and Fiat Chrysler Automobiles (FSA) also announced the shut down of all their production in the US, Canada, and Mexicon the US

The coronavirus outbreak has now set in alarms for the European automotive industry, with production facilities being temporarily shutdown.  The major manufacturers such as Volkswagen (VW), Fiat Chrysler, Peugeot, and Renault have closed down some of their production facilities for varying time periods. This has disrupted the automakers’ supply chain and sales figures.

Interesting facts about the European automotive industry :

  • Demand expected to drop by up to 20% this year.
  • VW’s share devalued by 45% since 20 January 2020.
  • Shares of Fiat, Peugeot, and Renault devalued by 50%, 43%, and 58% respectively since 20 January 2020

India: Make in India or Dependency on China?

India sources 27% of its auto components imports from China which is valued at $4.8 billion. We can imagine India’s dependency on China and probable risk in terms of disruption of the supply chain.

The electric vehicle sector in India relies heavily on imported cells for batteries and other electronic components. It is expected that the Electric Vehicle segment will experience a major slowdown in the coming years due to over-dependency on China and other countries for various components.

My assumption is that there will be a major push for domestic manufacturing, changes in the government policy and how to make an efficient supply chain in India. The major drawback of the Indian EV industry is the lack of technical capability and the unavailability of the raw material.

Battery manufacturing in India is at the initial stage and still there is a major dependency on China, Japan, and Korea to imports battery cells. An important to understand here is that the battery cells are not manufactured in India. Is it a threat or an opportunity ?

What is the need of the hour for India’s Electric vehicle Industry :

  • Localization of the components
  • The major focus of Battery manufacturing in India specially Battery Cells
  • Innovative business models
  • Efficient supply chain
  • Support from Government with policy changes as support to the EV industry

EV key for India is the localization of the supply chain and to cut reliance on imports which will allow the electric vehicle industry to come out of the current crisis situation.

Its time to think the Tesla Way: Touchless Deliveries 

 

 

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