The rating agency expects EVs to account for around 25 percent of domestic two-wheeler and 15 percent of passenger vehicle sales by 2030
The Indian auto component industry is poised for a major investment push in electric vehicle (EV) parts, with an estimated Rs 25,000 crore to be invested over the next three to four years. This surge is being driven by rising demand for EVs in India, with penetration expected to reach 4.7 percent by FY2024.
This investment will support capacity expansion, technological advancements, and product enhancements for EV components such as traction motors, control units, and battery management systems. A significant portion (45-50 percent) will go toward battery cell manufacturing, which is currently the most critical and expensive EV component.
The Indian government's Production Linked Incentive (PLI) program, recent EV policies, and state-level incentives are expected to encourage these investments. This initiative seeks to establish a domestic manufacturing ecosystem for EV components, particularly battery cells, which are currently heavily reliant on imports.
Establishing a local battery cell manufacturing ecosystem presents challenges such as technological complexity, high initial costs, and raw material availability. To overcome these challenges, manufacturers must collaborate and establish a strong battery recycling framework.
According to Icra, the rating agency behind this report, EVs will have a significant market share in India by 2030, accounting for 25 percent of domestic two-wheeler sales and 15 percent of passenger vehicle sales. This expansion will result in a potential revenue of over Rs 1 lakh crore for the electric two-wheeler component market and Rs 50,000 crore for the electric passenger vehicle component segment.