When electric vehicles (EV) become more and more popular can the automotive component industry be far behind? Auto component makers in India are bracing for change. They have not only lined up massive expansion and investment projects but are also diversifying derisking portfolios and entering into joint ventures (JVs) to ride into a brave new world.

As the component industry looks to invest $2-3 billion in the next two years most ancillary makers say EV parts are contributing a sizeable chunk to their order books.

Multinational companies such as Fiat’s parent Stellantis are looking to source more components from India to support their EV programme. On his recent visit to India Carlos Tavares group CEO of Stellantis said they are open to discussions with component makers and are ready to localise work on EVs considering India’s low-cost supplier base. Other companies like Renault and Daimler may also look at sourcing more EV parts from India.

This follows a visible shift towards electric mobility in both two- and three-wheeler industries. By 2030 almost the entire three-wheeler industry and close to 80 per cent of the two-wheeler industry could become electric. The rate of change in the passenger vehicle (PV) and commercial vehicle (CV) sectors is slower — only 10-15 per cent of PVs and about 10 per cent of CVs are expected to be electric by 2030.

Meanwhile, the industry body Automotive Component Manufacturers Association (ACMA) has conducted several tech shows for leading original equipment manufacturers (OEMs) in the EV space such as Hero MotoCorp Tata Motors Ashok Leyland Hyundai and Volvo Eicher to enable domestic components manufacturers to scale up and become globally competitive says Vinnie Mehta director-general ACMA. A study by ACMA and the Society of Indian Automobile Manufacturers has identified an opportunity to the tune of $20 billion in the next five years for the localisation of electric components.

This shift is propelled by policies such as the Faster Adoption & Manufacturing of Electric Vehicles scheme and production-linked incentive schemes. It could make India an attractive alternative source of high-end auto components for the world in the next five years.

Auto component companies focussed on engine parts forging casting etc are proactively diversifying or entering into JVs to make cost-competitive electric parts using the competencies they have in the casting and forging side said Hemal Thakkar director at Crisil Market Intelligence & Analytics.