The COVID-19 contagion continues to wreak havoc across all major developed and developing economies. The complete shutdown of economic activity in India over a period of 40 days between March to early May, is expected to shave off 6-7% of the total GDP and in the event of a prolonged shutdown, the economy is likely to see the worst contraction ever seen in its history. Rating Agencies and Multilaterals have already painted a grim picture on India’s economy and are expecting growth to be in the range of 1-2% in FY20-21. COVID-19 has led to both demand and supply shocks at the same time and has led to significant disruption of the supply chain. As the contagion triggered reverse migration, getting labour back to factories is not going to be easy. COVID-19 has had a devastating effect on oil prices that are at never before seen record low prices. Oil prices & derailment of the economy from its growth path are expected to dent the prospects of faster adoption of electric vehicles in India. The initial success anyways hinged on government support both in adoption and acceleration of indigenous production of electric 2W in the country.
The COVID-19 outbreak is leading to negative consequences for electric vehicle sales and battery manufacturing capacity globally. The auto companies including start-up which have been investing billions of dollars towards electric development might find it difficult to justify these investments for a little while resulting in delayed launch of new products, in the post-COVID era, especially larger companies. EV also will face competition from LPG / CNG for automotive as the gas prices are likely to stay depressed for a prolonged period. The core business of most of legacy 2W players is under weather and that would mean pushing the CAPEX earmarked for EV portfolio expansion further into the future timeframe when economics and market dynamics makes EV make a comeback. The only silver lining is that COVID-19 will change the way people commute and hence preferences will be for a private vehicle. As a result, there is a high likelihood of demand uptick for 2W in the Post COVID-19 situation and electric players will have to carve out their pricing strategy in a manner that they are able to position truly competitive product when compared to IC.
The research report aims to quantify the impact of COVID-19 on policy, supply chain, OEMs operations & expansion, demand scenario and overall growth outlook. The report will provide critical insights required for different stakeholders in the EV value chain to be prepared for the post-COVID-19 world.