Vertically Integrated EV Startups Will Continue To Make Standalone Components – Report


A top official of the Automotive Component Manufacturers Association of India (ACMA) stated that there will be room for standalone auto component manufacturers in the EV.

“Vertical Integration will be a continuous process. EV startups are going to do everything in-house. They will eventually farm out when they get big. Sunjay Kapur (President of ACMA, Chairman of Sona Comstar), spoke to the media.

Vinnie Mehta (Director General ACMA) stated that the industry provided components worth Rs 3,520 crore to the EV manufacturers. This is approximately one per cent of the sales made by OEMs (original equipment manufacturers).

Kapur says that even though the auto ancillary sector earns a significant sum by supplying transmission and engine components for internal combustion engines (ICE), the EV boom will not have a major impact on the industry.

“Cars, heavy-commercial vehicles, and stationary engines will all continue to exist,” Kapur stated that EVs would not cause engine manufacturers to lose their business.

Mehta stated that the total revenue of the auto component industry was Rs 4.20 lakh crore in fiscal 2021. This is an increase from Rs 3.40 lakh crore.

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Exports increased by 43% to Rs 1.41 lakh crore, while imports grew 33% to Rs 1.36 lakh crore, leading to a trade surplus in excess of $700 million. The steady growth of 15% was also seen in the aftermarket, which is estimated at Rs 74,203 crore. Mehta stated that component sales to OEMs on the domestic market increased by 22% to Rs 3.41 lakh crore.

Kapur says that the macroeconomic conditions are favourable and component manufacturers are experiencing increased demand. The industry’s overall production capacity is also good.

Mehta stated that the two-wheeler industry is struggling and that the capacity utilisation there – ancillaries supplying two-wheelers – will be lower.

Vehicle sales will gain momentum during the festive season, as a number of new launches are planned. Kapur stated that the increased attention of the auto industry to deep-localisation and the announcements of PLI schemes by the Government on Advanced Chemistry Cell Batteries and auto components will help create a state-of-the-art automotive value chain and assist in developing India as an attractive alternative source for high-end components.

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The component industry is also changing as two-wheeler and three-wheeler EVs gain popularity. He said that he is optimistic that the market’s buoyancy will continue throughout the year and that FY22-23 would see a healthy performance.

He believes that there is an opportunity for players to set up charging stations.

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